Author: Shiv Kukreja

CIBIL Score – Identity Theft

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at skukreja@investitude.co.in

What would you do if you come to know that a bank has sanctioned a loan in your name when you have not actually applied for any? How would you react when you find out that someone has used your name to get a credit card and has run up in couple of lakhs of rupees in charges using it?

Or worse, what if any of your credit card is used for some criminal activity? You would most likely stand clueless and approach the bank in a panic to ask for all the details about it. Most commonly this is a result of something called “Identity Theft” or just “Id Theft”.

Now, what is this Identity Theft? Identity theft occurs when someone uses your personal identification information to apply for a loan or a credit card. If this loan is sanctioned or credit card is issued, the individual has access to those credit facilities against which you would be held liable, if not paid for. Hence, the lender will update this default in your Credit Information Report (CIR) which will severely affect your CIBIL score.

Many a times we are required to provide our self-attested personal identification information in the form of PAN card, passport, driving license, voters id card or other similar documents, say for getting a bank account opened or making some kind of investment. Do we mention the purpose on the Xerox copies of these documents while we hand-over them to the concerned individual? Most of us do not. This careless act of ours leaves a big scope for these fraudsters to misuse our documents in such a way which might make us regret for the rest of our lives.

If you have read the previous CIBIL articles posted here, then you must be aware by now that how important role your clean CIR or CIBIL score plays in the loan application process. It helps you enjoy the benefits of easier and faster processing of loans or credit cards at better rates and/or terms.

How to prevent Identity Theft?

Identity theft can happen with anyone. You cannot simply sit idle and think it is not going to happen to me. Here are some things you can do to safeguard yourself:

1. Never share your credit card numbers and other personal identification information, especially over the phone or while browsing the internet.

2. Many companies ask for more information than they really need. Try filling the application forms yourself and provide only that information which is marked mandatory or which is required for your own convenience.

3. Carry only as many credit cards in your wallet as are absolutely necessary. Keep photocopies of all your cards handy with you so that they can be blocked quite easily in the event your wallet gets stolen.

4. Always deal with only those entities and websites which have been authenticated by service providers like Symantec etc. You can check the website’s legitimacy by clicking on their logo and thereby eliminate the risk of dealing with a clone of the legitimate company designed to collect your personal and financial information.

5. Make sure all your personal information you enter on a website remains strictly confidential. Read the website’s privacy policy to ensure that your personal information won’t be sold to others.

6. Review your CIR and monitor your CIBIL score at least once or twice every year to make sure your credit history accurately reflects your credit usage and activity and no unaccounted credit facility gets extended in your name and no new enquiry gets initiated by any of the banks. If you notice any discrepancy in the report, get in contact with the lender as well as the credit bureau immediately.

7. Make sure nobody, other than you or your close family members, has access to your personal information, identity proofs and address proofs. Keep all of these documents in a secure environment.

Problems can strike anyone at any time and leave a long-term impact. Awareness about some of these problems and taking necessary steps to build a shield against them can minimise their impact. So, I hope, now we all know what we need to do in order to safeguard our identities from getting stolen.

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SREI Infrastructure Finance Limited NCD Review

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at skukreja@investitude.co.in

SREI Infrastructure Finance Limited is the latest company to join the bandwagon of non-convertible debentures (NCDs) and without making much noise about it, the issue has already been launched by the company on September 20th. Though SREI Infra issued tax-saving infrastructure bonds last financial year, this is the first public issue of NCDs by the company.

This is a relatively small size issue of Rs. 150 crore only, including the option to retain Rs. 75 crore in case of oversubscription. The company plans to use the proceeds for various financing activities, to repay its existing loans, for capital expenditures and other working capital requirements.

About SREI Infrastructure Finance Limited

SREI Infrastructure Finance Limited is primarily engaged in providing infrastructure financing for the development of power, roads, urban infrastructure, telecom, SEZs and industrial parks etc. It is also engaged in equipment leasing, rentals & auctioning, project financing, project development, advisory and fund management. The company has also been granted the status of Infrastructure Finance Company (IFC) by the RBI, which makes it one among very few companies which have been given this status.

Financials of the company

SREI reported total income of Rs. 2,446 crore for the year ended March 31, 2012, as against Rs. 1,638 crore it generated for the year ended March 31, 2011, an increase of 49%. But, the company reported a decline of 38% in its net profit, which stood at Rs. 111 crore in FY12 as compared to Rs. 179 crore in FY11.

Gross NPAs and Net NPAs of the company stood at 1.25% and 1.12% respectively as on March 31, 2012. The company had zero NPAs till March 31, 2011. Debt Equity Ratio of the company stands at 1.54 times before this issue and will result in 1.60 times after this issue.

Here is the link to check the latest audited financial results of the company ending March 31, 2012 –

About the NCD Issue

These NCDs would be secured in nature and carry a maturity period of 7 years under all its options. These NCDs also offer a “Put Option” to the individual investors, which gives them the authority to redeem these bonds after 60 months from the date of allotment.

40% of the issue is reserved for the individual category portion, 40% of the issue is for the non-institutional investors and the remaining 20% of the issue is for the institutional investors. In this issue, there is no differentiation between the retail individual investors, including the HUFs, investing less than Rs. 5 lakhs and high-networth individuals (HNIs), investing more than Rs. 5 lakhs. The allotment will be made on a first-come-first-serve basis.

Category I – institutional investors and Category II – non-institutional investors are not allowed to subscribe for Series I – monthly interest option and Series II – quarterly interest option, whereas individual category investors can subscribe to any series of these NCDs.

Series I II III IV
Tenor 7 Years 7 Years 7 Years 7 Years
Frequency of Interest Monthly Quarterly Annual Cumulative
Category of Investors Individual Individual All All
Minimum Investment Rs. 1,00,000 Rs. 1,00,000 Rs. 10,000 Rs. 10,000
Coupon 9.84% 9.92% 10.30% N.A.
Effective Yield 10.30% 10.30% 10.30% 10.41%
Redemption Amount Rs. 1,000 Rs. 1,000 Rs. 1,000 Rs. 2,000
Put Option Yes; After 60M Yes; After 60M Yes; After 60M Yes; After 60M

There are many features in this issue which make it quite unattractive for the investors. Firstly, the interest rate is quite low as compared to the other issues. The company is offering these interest rates under four different series – payable monthly, payable quarterly, payable annually and cumulative annually, offering 9.84%, 9.92%, 10.30% and 10.41% per annum respectively. There is very little additional incentive for the retail investors in this issue.

These NCDs have been packaged in such a manner that the effective yield to the individual investors would be either 10.30% p.a. or 10.41% p.a. at the most. Under the cumulative interest option, the individual investors will get Rs. 2,000 and the institutional and non-institutional investors will get Rs. 1,980 at the time of maturity against Rs. 1,000 invested. The company will not deduct any TDS on the NCDs taken in the demat form.

Secondly, the company has decided to keep the minimum investment requirement of Rs. 1 lakh (or 100 NCDs of face value Rs. 1,000), if an individual investor opts for the monthly or quarterly interest option. I think this amount is too high to be the minimum investment from the small retail investors’ point of view.

Moreover, these NCDs are going to get listed only on the BSE and as the issue size is relatively small, this might create a liquidity problem in future.

It is not mandatory to have demat account to invest in this issue as the investors have the option to apply these bonds in physical form also. NRIs and foreign nationals among others are not eligible to invest in this issue.

The issue has been rated ‘CARE AA’ by CARE and ‘BWR AA’ by Brickwork Ratings and closes on October 25, 2012.

Like Muthoot Finance NCDs, I don’t find any single reason for me to invest in this issue as well. I think SREI Infra wants to test the water of the NCDs market with this issue, keeping the rate of interest below 10%. It is not going to attract great interest from either the institutional investors or the retail individual investors and should ideally remain undersubscribed even with the issue size of Rs. 75 crore only.

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CIBIL Dispute Resolution Process – Rectification of Discrepancies in Credit Report

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at skukreja@investitude.co.in

To err is human. Sometimes we make mistakes and we suffer. Sometimes others make mistakes and again we suffer. When we suffer due to our own mistakes, it is perfectly acceptable. But why is it so that we always need to suffer even when others commit mistakes or errors? That is where CIBIL Dispute Resolution process comes into the picture to help us.

A few days back, Paul and R Srinivas, two of the readers of OneMint, posted their comments/queries on one of the previous CIBIL posts. While Paul wanted somebody to take proactive steps to create more awareness about CIBIL credit score and Credit Information Report (CIR), he also pointed out something which constitute mistakes that we commit. This is what Paul had to say about it:

The people who have credit are also not aware of a credit score – especially even people working in IT/Post Graduates – they seems so detached from all these. They spend on credit cards, never pay back, switch jobs, cut cards without paying up – and finally end up with the worst credit score.

R Srinivas has been suffering due to mistakes committed by others i.e. the banking staff. Probably the banking staff did not send its report for CIBIL to update Srinivas’ records.

I have taken the CIR Report online and see that I have some settlements which were done 2-3 years back. I have all the letters provided by the Banks. They were around 5 Credit Cards and 1 PL. Due to some issues, I could not pay on time. But I have cleared all of them and have been provided with Settlement letters and in some has been mentioned that it will be updated in CIBIL report in 45-60 days. But it has already past 1 year and nothing has happened. Now if I apply for a loan it is getting rejected.

Could you please guide me how I can get my name cleared in CIBIL. I have been maintaining my bank accounts very well and my 2-wheeler loans as well. I assume that the score need for a Loan is above 750. Is that Correct.

Also can I contact Bank Ombudsman. Will they be able to clear my Name ?

CIBIL cannot be a party to all kinds of disputes. We need to understand that CIBIL is just a repository of credit information of all the customers of CIBIL’s members which include banks, financial institutions, non-banking financial institutions (NBFCs), housing finance companies (HFCs) and credit card companies.

CIBIL is not the owner of customers’ credit information i.e. it just collects this information from all its members and provides all the collected information to the same members whenever they require it. CIBIL cannot correct or make changes to these records on its own except the changes which fall in its purview. CIBIL makes changes to your credit information only when it is confirmed by the respective lending institution(s).

There can be more than one reason for these kind of mistakes/errors and some of them are:

1) Disputes where CIBIL Dispute Resolution process can help:

Data entry errors either by the bank or CIBIL – Rectification of CIR is required:  There are human errors in which either some of your personal information is inaccurate or some of your account details are wrong. The fields that can be rectified are – * Name * Date of Birth * Gender * Income Tax ID * Passport Number * Voter’s ID * Telephone Number(s) * Address * State * PIN * Account / Loan Type * Account Status * Ownership Type * Date of Last Payment * Date Opened * Date Closed * Sanctioned Amount / High Credit * Current Balance * Amount Overdue * DPD / Asset Classification

Non-updation of data either by the bank or CIBIL – Updation of CIR is required – Sometimes the staff of a bank or CIBIL just skip to update the data of settlement of a disputed credit facility, probably like how it happened in Srinivas’ case. In these cases, you can raise a dispute with CIBIL to get the data updated.

Updation in your personal identification information – Ensure that you have provided updated and accurate documents to the bank or CIBIL – When there is some updation in your own personal information, you should get it updated in CIBIL’s records as well, submitting your relevant documents.

Ownership mismatch of an account or Duplicate account – Rectification of CIR is required – If you find that some personal details or one or more account(s) on your CIBIL report do not belong to you or one or more account(s) are getting reflected more than once on the report, you can initiate a dispute request. CIBIL will look into the matter and update the information if required.

2) Disputes where CIBIL Dispute Resolution process cannot help:

Non-payment of outstanding amount on your loan or credit card including penalty charges – If you have a dispute with a lender itself regarding the outstanding amount on your loan or any other such matter, to which neither of the party is getting agreed, in that case, CIBIL will not be able to raise your request.

Non-updation of data within 45 days of making a payment – Lenders report information to CIBIL on a monthly basis, which would mean that the latest payment, which the lender is still to report, will not reflect on your CIBIL credit report.

Non-payment of outstanding amount on an “add-on” card – If an add-on card has been issued in your name to make you an authorised user of that card, then you are not liable to make payments against the outstanding amount. The primary card holder is responsible for payments on both the cards, primary as well as add-on credit card. But the fun ends here. If the primary card holder defaults on the payments for the add-on card, this will get reflected as a default on the CIBIL reports of both primary and add-on card holders. CIBIL will not be able to rectify your report, even if it was not your responsibility to pay for it.

Details of a closed account – CIBIL need to maintain all the accounts, delinquent accounts as well as good standing accounts, for a minimum period of 7 years from the date the account was last reported. CIBIL will not remove these details, even if you desire so.

Understanding CIBIL Dispute Resolution Process

It usually takes 30 days for a dispute to be resolved through CIBIL’s online dispute redressal mechanism. The process might test your patience as CIBIL depends on the concerned lending institution for this updation/rectification. Once a dispute request is raised, CIBIL will route your request to the CIBIL Dispute Resolution Department for analysis which will try to resolve the complaint itself, if that is possible without approaching the lender. Most of the times, the mistakes are not from the CIBIL’s end but are from the lender’s end.

If the updation/rectification falls beyond CIBIL’s purview, then it will send the dispute request to the relevant lending institution for resolution in whose purview the matter falls. Once the lender checks its records and responds back to CIBIL, either positively or negatively, CIBIL will then update its records. You will receive an email notification informing you of the results of the dispute request. To get your updated CIBIL report, you will again have to shell out Rs. 470 to purchase it.

How to raise Dispute Request

The easiest way to initiate a dispute request is by submitting a duly completed On-Line Dispute Form. You need to identify the erroneous information and mention a brief description of the error in this form. You will also be required to provide your personal details which must be accurate for CIBIL to initiate the dispute process and communicate the process outcome to you.

A dispute request can be raised based on a CIBIL report having a unique 9 digit “Control Number”. This number is displayed on the top right hand side of every report and it would be a new number whenever a fresh report is generated. This number and the date on which the CIBIL report got generated are mandatory inputs for you to submit your request as it helps CIBIL to identify the report on which you would like to ‘dispute’ information. You can ask the lender to provide you with this control number in case A unique Dispute ID would get generated once you submit the form.

I hope it must be clear to all of us by now how to raise a dispute request when there are mistakes/errors in our CIBIL report. It is the duty of CIBIL to help you resolve your dispute request and most importantly, the process is very simple.

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Now Get Live Subscription Numbers for IPOs of NCDs and Tax-Free Bonds

 This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at skukreja@investitude.co.in

Markets for corporate non-convertible debentures (NCDs), mostly issued by NBFCs, and tax-free bonds issued by public sector undertakings (PSUs) like NHAI, PFC, REC, IRFC and HUDCO have been expanding at a very rapid pace. With more and more awareness spreading about them, investors are getting interested in these instruments as equity markets are taking very long to come out of the woods.

But, as these securities are relatively new to many of the retail investors, they are finding it difficult to get reliable information about these securities. Accurate, relevant, and timely information is the key to good decision making. Realizing this and to keep the market participants, including the investors, well informed, SEBI has made it mandatory in the public issues of debt securities to bid for all the applications before submitting it to the collection banks.

This process for the public issues of debt securities like NCDs or tax-free bonds is very much similar to the IPO process of equity offerings. Earlier the investors used to remain clueless about the subscription figures of these issues, hunt for various sources for this info and seek help from their respective brokers, sub-brokers, agents or forums like OneMint. Lack of information or delayed information was making them indecisive to invest in these issues as they did not want to block their money without getting the bonds allotted.

Now with the information running Live on the exchange(s) where the issuer has proposed to list its debt securities, anybody can check the investors’ response to the issue online very quickly.

What was happening earlier?

Earlier the investors or the intermediaries assisting the investors were not required to visit any of the bidding centers in order to submit their applications. They used to visit the collection banks and submit the applications directly along with the cheque/demand draft and other necessary documents. The collection banks used to realize the payments for these applications in the Escrow Account of the issuer, punch the data into their systems by the evening and report the details of the same to the Registrar.

The application forms were then getting forwarded to Registrar for procurement analysis and resolution of investor grievances. As there were no bidding provisions, data was not getting updated on a real time basis and the subscription figures of the issue were getting updated very late in the day or in the morning of the next day. This was making the investors and the intermediaries unaware of the subscription figures.

What will happen now onwards post SEBI circular dated July 27, 2012

SEBI vide its circular no. CIR/IMD/DF-1/20/2012 dated July 27, 2012 has directed to the stock exchanges to put in place necessary systems and infrastructure to facilitate making applications to public issue of debt securities. The bidding process has also been made mandatory to put in place such systems. Now, because of this, the investors or the intermediaries assisting the investors will be required to visit the bidding centers of the syndicate members/trading members of the stock exchanges to submit their applications, which in turn will upload all the details of these applications on the online platform of the stock exchanges. This will be made Live by these exchanges on real time basis on their respective websites for market participants’ reference.

Now it will be the responsibility of these syndicate members/trading members to submit your applications along with the cheque/demand draft to the collection banks. The collection banks will continue to realize the payments for these applications in the Escrow Account of the issuer and forward these applications to the Registrar for procurement analysis and resolution of investor grievances.

India Infoline Finance Limited (IIFFL) has become the first company for which this system has been implemented by both the exchanges, BSE and NSE, where its NCDs are proposed to be listed. Here are their respective links to check the latest data for this issue’s subscription figures:

BSE
NSE

You can check the break-up of the subscription figures by each category of investors and their respective sub-categories of investors from this page of NSE.

Here is the graphical display of all the bids received in the issue cumulatively on BSE and NSE –

“Total Issue Size” shows the number of NCDs the company is offering in the issue without the green-shoe option, which is 25,00,000 (or 25 lakhs).

“Total Bids Received” shows the number of NCDs for which the bids have been received by both the exchanges collectively. This figure stands at 61,74,680 by the closing hours on September 6, 2012. Out of these 61,74,680 NCD bids, Series 1 (Monthly Interest Option) got the maximum number of bids for around 48,86,900 NCDs, Series 2 (Annual Interest Option) got bids for around 6,93,500 NCDs and Series 3 (Cumulative Interest Option) got bids for around 5,94,300 NCDs.

“No. of times issue is subscribed” is a figure which is derived by dividing Total Bids Received by Total Issue Size i.e. 61,74,680/25,00,000 = 2.47 Times.

I think this is a good step taken by the market regulator SEBI to keep us updated with the subscription figures of debt securities online. But, at the same time, it will cause some inconvenience to the investors who were earlier getting their applications submitted themselves with the collection banks. Now they will need to approach the syndicate members/trading members for bidding first and these members might insist the investors to use their applications before accepting them. SEBI need to appoint neutral participants to play the role of bidding centers. Lets see what happens!

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Shriram City Union Finance NCD Issue

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at skukreja@investitude.co.in

Shriram City Union Finance Limited (SCUF), a part of the Shriram group of companies and the sister concern of Shriram Transport Finance will be launching the public issue of its secured non-convertible debentures (NCDs) of Rs. 500 crore including a green shoe-option of Rs. 250 crore from September 12, 2012.

The company plans to use the proceeds from the issue to finance its business operations, repay the existing loans, for lending and investment purposes and other business operations including capital expenditure and working capital requirements. The issue closes on September 26, 2012.

About Shriram City Union Finance

SCUF, incorporated in 1986, is registered with the Reserve Bank of India as a deposit-taking non-banking finance company (NBFC) with its presence in gold loans, small business finance loans, auto loans, two-wheeler loans, personal loans and consumer durable loans. The promoter group companies hold 54.95% stake in the company at present. The company has a network of 927 branches as on June 30, 2012, out of which 654 branches are located in the southern states and 85 branches are located in Maharashtra.

Financials of the company

During the year ended March 31, 2012, SCUF reported total income of Rs. 2,056 crore as against Rs. 1,323 crore during the year ended March 31, 2011, an increase of approximately 56%, mainly on account of 68% growth in the assets under management (AUM) of the company at Rs. 13,431 crore in FY12 vs. Rs. 7,998 crore in FY11.

The company reported an increase of 66% in its operating costs to Rs. 425 crore in FY12 as compared to Rs. 256 crore in FY11 while there was a jump of 42.32% in company’s profit after taxes (PAT) which stood at Rs. 343 crore in FY12 as compared to Rs. 241 crore in FY11. It reported a marginal decline in its net interest margin (NIM) from 8.21% in FY11 to 7.53% in FY12. In the first quarter of FY13, the company earned PAT of Rs. 103 crore on total income of Rs. 674 crore.

Asset quality of the company has been improving consistently over the last 2 years despite a healthy jump in its AUM. Gross NPAs and Net NPAs of the company stood at 1.55% and 0.38% respectively as on March 31, 2012 as against 1.86% and 0.43% respectively as on March 31, 2011 and 2.27% and 0.71% respectively as on March 31, 2010. This consistent decline in the NPA figures is actually quite remarkable in the current business environment and looking into the kind of customer profile the company has.

Gold loans and small business finance loans constituted 64.84% of the AUM in FY12. This figure suggest that the company is primarily focusing on these two segments to grow its business. Its portfolio is geographically concentrated as just three states, Andhra Pradesh, Tamil Nadu and Karnataka, accounted for around 89% of its portfolio as on March 31, 2012.

Features of the Issue

The company is offering an annual coupon rate of 10.60% for a period of 36 months and 10.75% for a period of 60 months to all the categories of investors except the “Resident Individual Investors” i.e. for the retail investors investing up to Rs. 5 lakhs in a single name. Like it was done in the Shriram Transport Finance NCD issue in July, the company has decided to offer an additional incentive of 0.90% per annum for 36 months and 1% per annum for 60 months to the Resident Individual Investors.

40% of the issue is reserved for the Reserved Individual Category i.e. for the individual investors investing up to Rs. 5 lakhs and another 40% of the issue is reserved for the Non-Reserved Individual Category i.e. for the individual investors investing above Rs. 5 lakhs. 10% of the issue is reserved for the institutional investors and the remaining 10% is for the non-institutional investors. NRIs and foreign nationals among others are not eligible to invest in this issue also. The allotment will be made on a “first-come-first-served” basis.

The NCDs have been rated ‘CRISIL AA-/Stable’ by CRISIL and ‘CARE AA’ by CARE indicating high degree of safety regarding timely servicing of financial obligations and very low credit risk. The bonds will offer reasonable liquidity to the investors as they are going to list on both the stock exchanges – NSE and BSE.

Unlike Shriram Transport Finance and IIFFL NCD issues, investors will not have the option to apply these bonds in physical form i.e. it is mandatory for all the applicants to apply for these NCDs only in the dematerialised form.

The investors will have the option to get the interest either paid annually or at the end of the tenure along with the principal. Under the cumulative interest option, retail investors will get Rs. 1,743.30 after 5 years and Rs. 1,386.20 after 3 years for every Rs. 1,000 invested. For all other investors, these amounts stand at Rs. 1,666.65 and Rs. 1,352.90 respectively.

Series I I II II III III IV IV
Investor Category Individuals Non-Individuals Individuals Non-Individuals Individuals Non-Individuals Individuals Non-Individuals
Face Value Rs. 1000 Rs. 1000 Rs. 1000 Rs. 1000 Rs. 1000 Rs. 1000 Rs. 1000 Rs. 1000
Coupon 11.50% 10.60% 11.75% 10.75% N.A. N.A. N.A. N.A.
Redemption Amount Rs. 1000 Rs. 1000 Rs. 1000 Rs. 1000 1386.20 1352.90 1743.30 1666.65
Maturity Period 36 Months 36 Months 60 Months 60 Months 36 Months 36 Months 60 Months 60 Months

As is the case with all of the listed NCDs, the interest earned will be taxable but the company will not deduct any tax at source (or TDS). The issue keeps a minimum investment requirement of Rs. 10,000 (or 10 bonds of face value Rs. 1,000) which is somewhat higher than the minimum investment requirement of Rs. 5,000 in case of IIFFL.

Performance of the bonds issued last year

NCDs issued last year by SCUF offering 12.10% coupon and 60 months to maturity are currently yielding 12.06% with the last closing price quoting at Rs. 1,043.45. NCDs offering 11.85% coupon with 36 months to maturity are currently yielding 12.78% with the last closing price at Rs. 1030. The 60 months option was subscribed by maximum number of people last year and it is also the most traded option among all the options offered. So, going by these yields, 11.75% and 11.50% should not ideally attract too many retail individual investors. At least I would not be jumping on to it for my investments.

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India Infoline Finance Limited NCD Review

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at skukreja@investitude.co.in

India Infoline Finance Limited (formerly known as India Infoline Investment Services Ltd.) will be launching its second issue of non-convertible debentures (NCDs) from September 5, 2012. To keep things absolutely clear right from the beginning, I’ll use IIFFL as the short name for this company as I want to distinguish this company from its well known listed parent company, India Infoline Limited (IIFL), and advise the readers not to confuse this issue as the issue launched by the parent company IIFL.

About India Infoline Finance Limited

India Infoline Finance Limited is a credit and finance arm of the IIFL group and provides loans against property, housing loans, gold loans, loans against securities/margin financing and medical equipment financing to the corporates, high networth individuals (HNIs) and retail clients. One of its subsidiaries, India Infoline Distribution Company Limited, is also engaged in the business of distribution of financial products like mutual funds, insurance products, company fixed deposits, NCDs, National Pension System (NPS), IPOs etc.

The company was originally incorporated on July 7, 2004 as a private limited company which leaves this company with a very short operating history and unproven business track record.

Financials of the company

During the year ended March 31, 2012, the loan book of the company stood at Rs. 6,746 crore as against Rs. 3,288 crore, an increase of approximately 105%. This jump has been achieved mainly on account of mortgage loans and gold loans which constitute approximately 45% and 41% of the total loan book respectively. The mortgage loan book is contributed by loan against property (LAP) at 89% and home loans at 11%. These figures suggest that the company is primarily focusing on gold loans as the new business segment and LAP in the housing loan segment.

IIFFL reported revenues of Rs. 953 crore in FY12 as against Rs. 520 crore in FY11, a jump of almost 83%. It also reported 76% increase in its net interest income (NII) to Rs. 412 crore in FY12 from Rs. 234 crore in FY11 mainly on account of a 105% increase in its lending book. Gross NPAs and Net NPAs of the company stood at 0.61% and 0.44% respectively as on March 31, 2012 as against 0.37% and 0.30% respectively as on March 31, 2011.

The company has made a significant branch expansion in the gold loan business last year which resulted in 79% increase in its operating costs to Rs. 297 crore in FY12 as compared to Rs. 166 crore in FY11. This resulted in a very tepid improvement of 14% in company’s net profit after taxes (PAT) which stood at Rs. 105 crore in FY12 as compared to Rs. 92 crore in FY11.

Here is the link to check the latest audited financial results of the company ending March 31, 2012.

About the NCD Issue

The size of this NCD issue is Rs. 500 crore including a green-shoe option of Rs. 250 crore. The company plans to use the proceeds for various financing activities including lending and investments, to repay existing loans, for capital expenditures and other working capital requirements.

The bonds offer a coupon rate of 12.75% per annum in three different options – payable monthly, payable annually and cumulative annually payable on maturity. Unlike Shriram Transport Finance NCD, this issue will not offer any additional incentive to the retail investors and the same rate of interest will be offered to all the categories of investors. This uniform rate of interest should make it attractive for the Category I – institutional investors and Category II – non-institutional investors. Under the cumulative interest option, the investors will get Rs. 2054.50 at the time of maturity. The maturity period in all the three options will remain 72 months only.

Option I II III
Rate of Interest 12.75% 12.75% 12.75%
Interest Payment Monthly Annual Cumulative
Effective Yield 13.52% 12.75% 12.75%
Tenure 72M 72M 72M
Redemption Amount Rs. 1000 Rs. 1000 Rs. 2054.50

The interest earned will be taxable as per the tax slab of the investor but the company will not deduct any TDS on it as is the case with all of the listed NCDs taken in a demat form. The company has decided to keep the minimum investment requirement of Rs. 5,000 (or 5 bonds of face value Rs. 1,000) which has made it easily investable from the small retail investors’ point of view.

Like most of the NCDs, these bonds are going to list on both the stock exchanges – NSE and BSE. Investors will have the option to apply these bonds in physical form also.
25% of the issue is reserved for the “Reserved Individual Portion” i.e. for the individual investors investing up to Rs. 5 lakhs and another 25% of the issue is reserved for the “Unreserved Individual Portion” i.e. for the individual investors investing above Rs. 5 lakhs. 40% of the issue is reserved for the institutional investors and the remaining 10% is for the non-institutional investors. NRIs and foreign nationals among others are not eligible to invest in this issue. The allotment will be made on a “first-come-first-served” basis.

IIFFL is a relatively new company with a limited operational track record. The issue has been rated ‘AA-/Stable’ by CRISIL and ‘AA- (Stable)’ by ICRA. One notable point I want to emphasise here is that unlike last year and unlike all NCD issues of the past, these NCDs qualify as “Unsecured Redeemable Subordinated Debt” in nature or in other words, in the event of default, no charge upon the assets of the company would be created in connection with these NCDs.

I’ve picked this text from the DRHP

“The NCDs will be in the nature of subordinated debt and hence the claims of the holders thereof will be subordinated to the claims of other secured and other unsecured creditors of our Company. Further, since no charge upon the assets of our Company would be created in connection with the NCDs, in the event of default in connection therewith, the holders of NCDs may not be able to recover their principal amount and/or the interest accrued therein in a timely manner, for the entire value of the NCDs held by them or at all. Accordingly, in such a case the holders of NCDs may lose all or a part of their investment therein. Further, the payment of interest and the repayment of the principal amount in connection with the NCDs would be subject to the requirements of RBI, which may also require our Company to obtain a prior approval from the RBI in certain circumstances.”

Though this feature should not make this issue an untouchable one to invest in but the investors should exercise extreme caution while investing in such issues as extreme adverse business conditions related to gold loan business or housing loan business might put IIFFL’s fortunes in trouble and it would become difficult for the investors to recover their hard earned money in the form of investment.

The issue closes on September 18, 2012.

Performance of the bonds issued last year

As I mentioned in the Shriram Transport Finance NCD post also, as many as ten such NCD issues had hit the markets last year issued by companies like Shriram Transport Finance, Shriram City Union Finance, Muthoot Finance, Manappuram Finance, Religare Finvest and India Infoline Investment Services Ltd. All the issues, except Shriram Transport Finance NCDs, listed at a discount and that too at a very deep discount of 5-8% in some cases. Many of them have still not been able to recover from those losses. They are yielding higher than 13% even now.

NCDs issued last year by IIFFL offering 11.90% coupon were secured in nature and are currently yielding 13.75% under the 60 months reserved individual option with the price quoting at Rs. 1001.10. It is the most traded option among all the options offered last year.

Next 20-30 days will witness three more such NCD issues seeking your investment offered by Shriram City Union Finance, Muthoot Finance and Religare Finvest. These companies have already filed their respective draft red herring prospectus (DRHP) with SEBI and almost all the regulatory formalities have been completed. Let us see how these NCDs perform once they get listed and if they are able to give any kind of much needed relief from the sinking stock prices or escalate our pain by listing at a discount again.

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Mutual Fund Capital Gains Statement and Consolidated Account Statement Online

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at skukreja@investitude.co.in

Not many mutual fund investors know that they don’t require services of their distributors or any other agent/advisor to check the status of their investments or realised/unrealised profit/loss they have made in mutual funds. Surprisingly, even many of the distributors don’t know that it is very easy to get various kinds of consolidated mutual fund statements online and that too in a very short span of time.

Actually writing about it struck me when I was surfing Suggest a Topic here and also while I was filing I-T returns for my clients during the last fortnight of July. I used this tool for a few clients of mine while calculating their “Capital Gains” and “Exempt Income”.

Are you surprised, curious and happy at the same time that such a service exists? Just read on how to go about getting these statements in your mailbox. I’m sure you would like to use this service as soon as you finish reading this article.

All what is required to get the necessary information related to your mutual fund investment is that your email id(s) must have been registered with the mutual fund company with whom you’ve made the investment and the same email id should still be active or you can make it active if required.

Here is the process to follow on CAMS Online:

  • Visit CAMS Online website – https://www.camsonline.com/default.asp
  • Click on “Online Services for Investors”
  • Click on Check it Out! under Mailback Services
  • Here you have the option to choose the statement(s) you require for your purposes
  • For Capital Gain purposes – Click on “Consolidated Realised Gains Statement”. It is also called Investment Performance Statement. It calculates realised gains/losses on FIFO a basis and segregates them as long term and short term. The statement also contains a summary of the dividends paid out in respect of the account
  • To check your entire holdings across CAMS, Karvy and Franklin serviced mutual funds – Click on “Consolidated Account Statement – CAMS+Karvy+FTAMIL”
  • For other purposes, click on the other respective tabs available there
  • Once you select the statement you require, you need to provide your email id(s) which you or your distributor/advisor/agent must have filled when you did your investment(s). If you want to have all your investments across different email ids, you need to repeat this process
  • Select the Delivery Option – a download link or an encrypted attachment
  • Enter a password of your choice twice just to protect the statement from misuse

CAMS Online accepts only 2 such requests per day and 10 requests per month per registered email id as a precautionary measure in order to prevent spamming. This is an email-only service i.e. if your email address is not registered with the mutual fund company, then you’ll not be able to have your statement online through this process, not even with your PAN or Folio No. In that case, you’ll have to contact the mutual fund company and they’ll send it to your address registered with them or the address registered with CVL while undergoing KYC process.

Here is the process to follow on Karvy Mutual Fund Services (Karvy MFS):

  • Visit Karvy MFS website – https://www.karvymfs.com/karvy/
  • Click on “Investor Services”
  • Under Mailback Services, you have the options to check your portfolio by email id or PAN, get your Account Statement by email id or folio no. and Capital Gains Report by folio no.
  • Click on the tab as per your requirement and feed the necessary input to get your statement(s)
    • “Portfolio By Email ID” – This tool mails your latest Portfolio Valuation
    • “Portfolio By PAN” – This tool mails your latest Portfolio Valuation
    • “Account Statement By Email ID” – This tool mails your latest Account Statement
    • “Account Statement By Folio” – This tool mails your latest Account Statement
    • “Capital Gains By Folio” – This tool mails your Capital Gain Report
  • To check your entire holdings across CAMS, Karvy and Franklin serviced mutual funds – Click on “Consolidated Account Statement – CAMS+Karvy+FTAMIL” under Online Services

With Karvy, you need to have the Folio No. of your mutual fund investment to get the Capital Gain Report. If you don’t have the folio number. readily available with you, then you can first get the account statement in your mailbox and then get this report by taking folio number from the account statement.

I hope this article helped you in getting to know about the whole process of getting these statements in your mailboxes. If you have any query or feel that I’ve missed something here please leave a comment and I’ll definitely respond to it.

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Best Company Fixed Deposits – Returns-Wise & Safety-Wise – Be Wise

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at skukreja@investitude.co.in

Continuous volatility in the stock markets coupled with bad macro-economic data, high inflation numbers and unclear government policies have forced many investors to shift their investments from equity to fixed income instruments like tax-free bonds, non-convertible debentures (NCDs), bank fixed deposits and company fixed deposits. Whereas bank fixed deposits barely manage to beat inflation, some investors always remain on the lookout for higher returns from company fixed deposits.
A few days ago, one of the readers, Vimal Raj, put up a query regarding fixed deposit offering from Hawkins. Here is the quote Vimal Raj left under Suggest a Topic:

“In today’s ET, I read that Hawkins is open for Fixed deposit. Is it worth to invest in? And why they are offering fixed deposit rather than bonds?”

Here is my effort to make the readers know some of the details about company fixed deposits and what you should be looking for before making an investment.

Not all companies can accept public deposits. Government companies, manufacturing companies, housing finance companies (HFCs), financial institutions and non-banking financial companies (NBFCs) registered under the Companies Act 1956, have been authorized to offer fixed deposits. Whereas bank fixed deposits are covered by a guarantee from the Deposit Insurance and Credit Guarantee Corporation of India, which assures repayment of Rs. 1 lakh in case of any default by a bank, but there is no such guarantee for company deposits.

However, if any company including an NBFC or HFC defaults in repayment of deposit, the investor can approach Company Law Board (CLB) or consumer forum or file a civil suit in a court of law to recover the deposits.

Who regulates company fixed deposits?

Category Regulator Website
Government Companies MCA www.mca.gov.in
Manufacturing Companies MCA www.mca.gov.in
NBFCs RBI www.rbi.org.in
Housing Finance Companies NHB www.nhb.org.in
Financial Institutions MoF www.finmin.nic.in
http://www.watchoutinvestors.com/http://www.iepf.gov.in/

Factors that investors should be looking for before investing in company fixed deposits:

Credit Rating: It goes without saying that safety of the principal amount is the most important factor that any investor would consider before seeking a higher return. It will take you 10 years to recover your principal amount if you risk your investment with a company likely to default but offering 12.5% return vis-a-vis a financially sound company offering 10% return.

Reserve Bank of India (RBI) and National Housing Bank (NHB) have made it mandatory for NBFCs and HFCs such as HDFC, Shriram Transport Finance etc. to have at least ‘A’ rating to be eligible to accept public deposits. Whereas HDFC deposits have been rated ‘FAAA’ by CRISIL and ‘MAAA’ by ICRA, ICRA has granted a rating of ‘MAA’ to Canfin Homes for securing these deposits. As per CRISIL, ‘AAA’ rating implies that the company has the highest credit quality and the lowest credit risk. All the companies which get their fixed deposits rated by the rating agencies are required to clearly display the given rating on their application forms.

Credit risk is the biggest risk for fixed deposit investors. Investors should not get too greedy for high interest rates while looking to invest in fixed income instruments rather they should focus on 4 C’s of credit analysis – capacity, collateral, covenants and character of the issuer.

Capacity is the ability of a borrower to repay its obligations. Investors should primarily focus on the financial condition and past track record of the company before committing their hard earned money into these deposits.

Collateral represents assets that the company pledges as an alternate repayment source against the deposits. I have no idea which companies in India offer collateral while accepting public deposits for the safety of investors’ money. If any reader has an idea about any such company then please let me know.

Covenants are the terms and conditions of the lending agreements. Covenants are essentially restrictions on the company to ensure its financial position remains under check and help minimise the risk to the depositors.

Character refers to the credit history of the borrower. It is very important to check how efficient the management of the company is and how prompt the company is towards the payment of periodic interest, maturity proceeds and issuing investment certificates. You must ask your financial advisor or the servicing agent all these things before deciding the company to invest. My personal experience with HDFC was quite satisfactory whereas it was not very good with Jaiprakash Associates and Unitech.

Financials: Securing a rating is not mandatory for non-finance companies. So, in their case, the investors need to check their balance sheets, profit & loss accounts and cash-flow statements in order to understand how the company would generate the money to make the interest payments and principal repayments.

Rate of Return: Presently, the maximum rate of interest any company can offer is 12.5%. Observing the returns these companies are offering at present suggests that in most of the cases the safer the deposits are, the lower the returns will be but it is not always the case. It is natural to consider the term deposits offered by the government organizations to be the safest, probably that is why their returns are also lower. The investors need to make a balance between the risks and the returns.

Here is a list of the major company fixed deposits that are open to investors right now.

Companies Ratings 12M 24M 36M 60M Senior Citizens
Government Organisations
EXIM Bank CRISIL FAAA/ ICRA MAAA 9.25% 9.25% 9.25% 9% +0.50%
HUDCO FITCH TAA+/CARE AA+ 9.40% 9.40% 9.40% 9% +0.25%
Kerala Transport Development Finance Kerala Govt Undertaking 10.25% 10.25% 10.25% 10% +0.25%
SIDBI CARE AAA 9.25% 9.10% 9.10% 9.10% +0.50%
Housing Finance Companies (HFCs)
NHB CRISIL FAAA/ FITCH TAAA 9.50% 9.50% 9.25% 9.25% +0.60%
Canfin Homes Ltd. ICRA MAA 9.75% 9.75% 9.50% 8.50% +0.50%
DHFL CARE  AA+/ BWR FAAA 11% 10.50% 10.50% 10.50% +0.50%
HDFC CRISIL FAAA/ ICRA MAAA 9.25% 9.40% 9.50% 9.25% +0.25%
PNB Housing Finance CRISIL FAA+ 9.50% 9.50% 9.75% 9.75% +0.50%
LIC Housing Finance CRISIL FAAA 9% 9.25% 9.50% 9.50% +0.25%
Gruh Finance CRISIL FAA+/ ICRA MAA+ 9.25% 9.75% 9.50% 9.50% +0.25%
Sundaram BNPP Home Finance ICRA MAA+ 9.25% 9.50% 9.50% 9.50% +0.50%
Non-Banking Financial Institutions (NBFCs)
Sundaram Finance ICRA MAAA 9.75% 9.50% 9.50% N.A. +0.50%
Mahindra Finance Samruddhi CRISIL FAAA 9.25% 10% 10.25% 9.75% +0.25%
Shriram Transport Unnati CRISIL FAA+/ ICRA MAA+ 9.25% 9.75% 10.75% 10.75% +0.25%
Manufacturing Companies 6M 12M 24M 36M Senior Citizens
Ansal API(www.ansalapi.com) 11.50% 12% 12.25% 12.50% N.A.
Ansal Housing(www.ansals.com) 10% 11% 11% 11.50% N.A
Apollo Hospitals(www.apollohospitals.com) N.A. 9% 9.25% 9.50% N.A.
Bombay Dyeing(www.bombaydyeing.com) N.A. N.A. N.A. 10.50% +0.50%
CEAT Ltd.(www.ceat.in) N.A. 9.50% 10% 10.50% +0.25%
Elder Pharma(www.elderindia.com) N.A. 10% 11% 12% +0.50%
Force Motors(www.forcemotors.com) N.A. 9% 10% 11% N.A.
Gati Ltd.(www.gati.com) N.A. 10% 10.50% 11% +0.25%
Ind-Swift Labs(www.indswiftlabs.com) N.A. 11% 11.50% 12% +0.50%
Jaiprakash Associates(www.jalindia.com) 11.50% 11.75% 12.25% 12.50% N.A.
Jaypee Infratech(www.jaypeeinfratech.com) 11.50% 11.75% 12.25% 12.50% N.A.
J K Tyre & Industries(www.jktyre.com) N.A. 9% 9.25% 9.50% +0.50%
Unitech  11.50% 11.50% 12% 12.50% N.A.
Valecha Engineering(www.valechaeng.com) N.A. 10% 10.50% 11% +0.50%
* Special Tenure FD Rates – HUDCO – 8.50% (84M), DHFL – 10.75% (400 Days), HDFC – 9.75% (15M & 33M), PNB Housing Finance – 9.50% (84M), LIC Housing Finance – 9% (18M), Gruh Finance – 9.50% (84M), Sundaram Finance – 9.75% (18M), Mahindra Finance Samruddhi – 9.75% (18M)

Liquidity: As per deposit regulations, companies in India cannot accept demand deposits. A deposit which is immediately withdrawable on the depositor’s demand is called a demand deposit. There is a lock-in period of 3 months during which the investors cannot ask for a withdrawal of their investment except in the event of the death of the depositor. If you go for a withdrawal between 3 months and 6 months of making the investment, no interest is paid. Thereafter there is a penalty of 1% if you go for a premature withdrawal.

As per the RBI and NHB regulations, minimum period of deposit cannot be shorter than 12 months and maximum period of deposit cannot be greater than 60 months in case of NBFCs and 84 months in case of HFCs. For manufacturing companies, the minimum period cannot be shorter than 6 months and the maximum period cannot be greater than 36 months.

Tax Implications: The interest income earned on a company deposit is taxable at the same tax slab as the investor is in and is added to the income under the head “Income from Other Sources”. Tax will be deducted at source @ 10.30% whenever the interest income exceeds Rs. 5000 in a financial year, in accordance with section 194 A of the Income Tax Act, 1961.

Floating Rate Option: Suppose you take a floating rate home loan at 10.25% and after 6 months, the housing finance company announces an increase in its lending rate by 0.75%, the applicable rate on your home loan automatically becomes 11%. Have you ever heard of any bank or a company offering a similar benefit on your fixed deposit? I did not till the time I visited the website of EXIM Bank of India. This is a unique feature of the term deposit scheme offered by this bank. Suppose you do a fixed deposit of 36 months with the EXIM Bank at 9.25% and after 12 months the bank decides to increase the rate to 10% for the same maturity, the applicable rate on your deposit will automatically become 10% for the residual period of investment.

Moreover, if the existing rate on a deposit, say 9.25% (contracted based on original maturity at the time of placing deposit), is higher than the revised rate applicable for the residual tenor, say 8.50%, then the original higher rate of 9.25% would continue to apply.

Coming back to Vimal Raj’s query, I could not find any details of the fixed deposit scheme offered by Hawkins Cookers Ltd. anywhere, not even on the company’s website and annual report. So, I’ll not be able to comment on that.

RBI may not be in a mood to cut the interest rates and concede against the spiraling inflation, but if we observe the recent actions taken by some of the big banks including SBI etc., returns on some of the fixed income instruments should soon begin their journey downwards. So, if you find these rates attractive enough to park your money from risk-return perspective then you should lock into these deposits soon before they start falling.

To be posted soon: “Company Fixed Deposits – Should You Invest?”

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CIBIL Credit Score – Negative Factors and Ways to Improve your Score

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at skukreja@investitude.co.in

Many of you must have checked your CIBIL credit score sometime in the past and for some of you it must have got a surprise either positively or negatively. Some of you might have been caught unaware of a credit card account running in your name with annual charges being levied year after year. Some of you might have undergone for a loan settlement with the lender which could have impacted your score quite negatively.

But to your surprise, some of you could have found your credit score to be quite high, despite defaulting a couple of times. This is due to some unique but scientific methodologies being adopted by CIBIL to calculate your score.

Factors that negatively affect Credit Score:

1. Late payments or defaults in the past: Your payment history has a significant impact on your credit score. So, if you have missed payments on any of the existing loans over the past couple of years, then the credit score would get negatively affected as it indicates you are facing difficulties in servicing the existing obligations.

2. High utilization of credit limits: You must remain quite careful while using the credit limits available on your credit cards. A higher and higher utilization pattern against the available credit limits is an indication of an increased repayment burden and may negatively affect your credit score. Lower outstanding balances getting reflected in your credit card statements improve this score.

3. Higher percentage of Credit Cards or Personal Loans (i.e. Unsecured Loans): A higher number of unsecured loans coupled with a high utilization would also affect the score in a negative way because of the fact that these unsecured loans carry a very high rate of interest as compared to secured loans like home loans or car loans and result in larger payments and higher defaults.

4. Behaving Credit Hungry: If you are behaving “Credit Hungry” (i.e. in an urgent need of money) and have applied for new credit facilities with a large number of lenders, then it is going to affect your score negatively and make the lenders more cautious while evaluating your application for a fresh loan.

Can your CIBIL Credit Score be improved? If yes, how?

As I mentioned in my earlier post, it is like a CAT examination. Like you can always improve your CAT score by appearing for the exam again, your CIBIL credit score can also be improved, but not overnight. If you have taken a 20-year home loan which is just a couple of years old and you’ve defaulted on your EMIs 3-4 times since the beginning, then it will probably take you at least 2-3 years or probably more than that with regular EMI payments to improve your score. You will have to maintain the greatest of financial discipline in order to secure a better credit treatment in the future. Here is how it can be done.

Measures to improve your Credit Score:

1. Pay your loan EMIs regularly in a timely manner to maintain a clean credit history: Try to keep a diligent track of your EMIs in case you are running more than one loan.

2. It is highly advisable to make full payments on your credit card instead of just the minimum payment. In case it becomes very difficult to pay the bill in full, at least make the minimum payment without fail.

It takes you a longer time to build your credit history with a loan as compared to a credit card as these loans are usually for a longer tenure whereas a regular payment of your credit card bills can help you start building a good credit score as you keep on making the regular payments. A credit card debt is categorized as a revolving credit and it helps in building a good credit score faster if the payments are regular.

3. Do not apply for an extra credit card unnecessarily when your bank’s relationship manager approaches you to get one and actually you do not require it. Applying for an extra card or a loan without any requirement would mean more credit exposure and reaching near the card’s credit limit would result in a lower credit score.

4. If you have been issued a credit card but you have not used it very frequently or the utilize credit limit has been very low, then this would affect your credit score in a positive way as unused credit cards actually imply that you are financially secure.

5. You should use special incomes like bonus or a monetary gift or some other source of savings for the prepayment of some of your existing debt. Early repayment of debt also helps in improving your score.

6. Avoid becoming a joint account holder or a guarantor in a loan or a credit card facility as any default would lower the quality of your credit score.

7. Avoid going in for a settlement or “write-off” of your loan accounts as it implies that you have not been able to pay the past dues. Keeping the credit history clean improves your credit score.

8. You should keep reviewing your credit history on a regular basis to ensure that the credit report accurately reflects your current financial status.

At the end of the day, common sense should dictate what you do with your financial life and good financial habits along with awareness of credit scores will help you build a good credit history and a good credit score.

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Check Your CIBIL Credit Score & Credit Information Report Online

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at skukreja@investitude.co.in

This is the 3rd post in a series of posts covering CIBIL Credit Information Report and CIBIL Credit Score. You can access the earlier two posts here:

CIBIL TransUnion credit score – role in a loan application process

CIBIL Credit Information Report

By now, you must have become well versed with the contents of a Credit Information Report and the significance of a credit score. Now it is time to know how you can access your report and know what your credit score is.

You can access your CIBIL TransUnion Score along with the full Credit Information Report for a nominal fee of Rs. 470. You are just required to fill a request form with some basic details like Name, Address, Date of Birth, Gender, Contact Details etc. and keep the self-attested copies of your Identity Proof and Address Proof ready.

You can see the application here.

Online payments can be made either through Net Banking platform of a bank or through a debit card/credit card/cash card. The net banking facility is available with 33 banks as of now. You will get a unique CIBIL registration ID and transaction ID as a confirmation on successful completion of your online payment. After the payment is made, you need to answer 3-5 questions about any of your loans or credit cards to authenticate your application. You’ll then be required to provide the soft copies of your identity proof and address proof.

If your application gets authenticated, you’ll receive your credit score and CIR in your e-mail in about 2-4 days. However, if the authentication fails, you need to take a printout of the receipt for online payment and mail it to the below mentioned CIBIL address along with your proofs.

Consumer Relations: Credit Information Bureau (India) Limited,
Hoechst House, 6th Floor, 193 Backbay Reclamation,
Nariman Point, Mumbai 400 021, India.
Tel.: 022 61404300, email: info@cibil.com

Offline Application

If you decide against going online, then you will have to take a printout of the application form, duly fill it and get a Demand Draft (DD) made worth Rs. 470. Again attach the copies of your identity and address proofs along and send it to the above mentioned address.

Also, if you wish to purchase only your Credit Information Report, then you can do so by having a DD of just Rs. 154 and follow the above mentioned process. But, in that case, the process would be offline only because there is no provision to get it online without asking for your credit score.

You also need to sign the form in order to confirm your requests. Note that the address proof (except passport) – bank statement, telephone bill, electricity bill or credit card statement should not be more than 3 months old and should be in your name matching with your name in your loan/credit card account or on your PAN card (if you do not have any loan or credit card).
Like many of us undergo physical health check-ups, I think one should get his or her credit score checked at least once a year. It will keep you aware of your credit health and make you take necessary steps to correct it whenever required.

So what are you waiting for now? Just visit the CIBIL website and get your score checked. I’m sure there will be many surprises in store for many of us. Just share your score and experiences here with us so that we have a platform to understand these things in more detail.

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