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Time of India
26-05-2025
- Business
- Time of India
MFI portfolio continues to de-grow, asset quality remains challenging: Report
Microloans portfolio for all lenders de-grew by 14 per cent year-on-year to Rs 3.81 lakh crore at the end of the March quarter, a report said on Monday. Asset quality continued to remain challenging, even though loans unpaid for up to 30 days showed some improvement quarter-on-quarter, the report by Crif High Mark, a credit information company, said. It can be noted that the last year has been a difficult one for the microfinance industry, serving people at the bottom of the pyramid with smaller and livelihood-centric loans. Asset quality has worsened, and over-leverage and multiple lending relationships of borrowers have been called out as the key reasons for it. The industry has taken a slew of actions, including limiting a single borrower's lender relationships to four, to arrest the slide in asset quality since 2024. The threat of ordinances led lenders to contract faster in Tamil Nadu and Karnataka, which showed a 7 per cent decline in gross lending portfolio quarter-on-quarter, while West Bengal showed a 1.5 per cent increase. The number of active loans declined 14 crore at the end of March, down from 14.6 crore in December and 16.1 crore in the year-ago period, the Crif report said. Live Events The industry disbursed 1.33 crore loans in the three-month period between January and March, which is down from 2.40 crore in the year-ago period. When compared to the quarter-ago period, the number of loans was higher at 1.2 crore in the October-December period. On the asset quality front, the CIC report said early delinquency of loans unpaid for up to 30 days improved to 1.4 per cent in March against 1.8 per cent in December, but added that the same continues to rise in other buckets, signalling "ongoing challenges". Having adopted certain guard rails, the industry seems to prefer to lend higher amounts, the report said, pointing out that portfolio for loans above Rs 1 lakh grew by 38.5 per cent year-on-year, while those below Rs 30,000 were down by 36 per cent. The CIC said the MFI sector is on the path to long-term sustainability. While current indicators suggest cautious lending and persistent stress in parts of the portfolio, improvement in early-stage performance and a gradual move towards higher-quality credit segments are encouraging trends, it said. "Lenders are making conscious choices that favour resilience, stability and long-term institutions recalibrate and regulatory frameworks evolve, we are confident that the sector is laying the groundwork for stronger and more inclusive growth," its director and head of sales Ramkumar Gunasekaran said. Economic Times WhatsApp channel )
Local Germany
04-04-2025
- Business
- Local Germany
Everything you need to know about Germany's 'Schufa' credit score
For people who've recently moved to Germany, 'Schufa' is a scary word that comes up time and time again. You may be asked for it while searching for apartments online, or told about checks while trying to open a bank account. You may hear about it as you set up a brand new mobile number, or when hiring a van to move your stuff. As a newbie in Deutschland , it can take time to build up your credit history. If you're unlucky, you may find yourself getting rejected from some services in spite of having a glowing record back home. As time goes on, you should be able to get a more accurate credit score, but you still may have no idea how it's calculated. Critics often nickname Schufa the "black box" because of the agency's top secret methods for picking that magic number. That could all change later this year when a new scoring system is set to be introduced. According to CEO Tanja Birkholz, the new score will be much more understandable for consumers. In future, you may even be able to broadly calculate your credit score yourself. In the meantime, here's everything you need to know about Germany's current Schufa system. What's a credit score and why do I need one? Creditworthiness scores are probability values that predict how reliable you may be as a tenant or borrower. The general principle is simple: the higher the score, the higher the creditworthiness. If you regularly miss payments or pay bills late, your score is likely to be lower. The best-known score in Germany is calculated by the Wiesbaden-based credit agency Schufa . However, other credit agencies such as Creditreform or Crif also create their own scores. In German, you credit score is known as a Bonitätsscore . Advertisement Companies, as well as individuals such as landlords, can obtain information about your credit history if they have a legitimate interest in it. However, a bank won't receive full details of your credit obligations from Schufa , but will instead simply see a numerical score. How can I find out my score? Everyone is entitled to a free copy of their Schufa report once a year to keep track of their credit rating. To get the free version, you'll need to go to and order the 'Datenkopie nach Art. 15 DS-GVO'. Simply click on 'Datenkopie bestellen' at the bottom of the home page, fill in the form and upload a scan of your passport or personal ID card. Another option is to download the Bonify app - a free credit-score checking app that was obtained by Schufa . Since the acquisition, users can check their basis Schufa score in the app within minutes. READ ALSO: What to know about the new credit score app in Germany What influence does a Schufa score have? A Schufa score can have a big impact on whether you can access certain goods and services - and on what terms. Banks, online retailers, mobile phone providers, car dealerships and energy suppliers all want to know more about your previous behaviour. This can help them assess how risky it is to work with you, and could have an impact on the interest rates they offer you, for example. Your credit score is a useful benchmark for these risk assessments, and can sometimes be used to decide a 'yes' or 'no' automatically. The Bonify app shows a user their current credit score. Photo: picture alliance/dpa | Peter Kneffel What do the numbers mean? The Schufa credit score is a score from 0 to 100, which is calculated in percentage points. A score of 100 is sheer perfection, while zero is so bad it's pretty much unheard of. Here's a rough breakdown of how the numbers is interpreted by lenders: 97.5 and above: Very low risk 95 - 97.5: Low to negligible risk 90 - 95: Satisfactory to increased risk 80 - 90: Increased to high risk 50 - 80: Very high risk 50 and below: Critical risk Advertisement Though a bad score is certainly a worry, it is worth noting that it is only one piece of information used by companies. As Schufa itself emphasises: lenders, rather than credit agencies, are in charge of making a final decision. When a bank requests a loan, for example, it asks Schufa about the customer's creditworthiness. The bank then looks at its own information, such as the customer's income, expenditure and assets. It then makes a decision based on its willingness to take risks. What data does Schufa collect? The credit agency receives information from its partners about the opening of current accounts, the issuing of credit cards, and the conclusion of leasing contracts and loans. Negative information recorded by Schufa comes from public registers such as debtor directories, for example. Schufa also stores personal data such as name, date of birth and address, but has no information about a person's income, for example. Advertisement According to the latest figures, Schufa has information on 68 million people in Germany - out of a population of around 84 million. More than 90 percent of the information stored is 'exclusively positive', the company claims. According to its own information, the credit agency issues an average of 320,000 reports to companies every day. READ ALSO: How foreigners can improve their German credit score What is taken into account when calculating creditworthiness? There are a number of criteria used to calculate a customer's credit score, including how long you've held certain accounts, how many bank accounts and credit cards you have and how many types of loan you need to pay off each month. Generally, having multiple accounts with high credit balances will work against you, while simple finances with low credit balances will work in your favour. Schufa is also interested in current property loans and whether someone frequently makes online purchases using credit. However, this criteria is set to be shaken up somewhat when the new Bonitätsscore comes into force towards the end of the year. The Schufa headquarters in Wiesbaden. Photo: picture alliance/dpa | Andreas Arnold Why is Schufa working on a new score? According to the credit agency, it's to better reflect changing consumer habits and behaviours. One key example is that consumers are using comparison portals more frequently and are therefore changing their bank more often than ten years ago, which isn't necessarily a sign of lower trustworthiness. READ ALSO: How to avoid the 'catch 22' in Germany's credit rating system How will the new score be calculated? The calculation of the new score takes into account, for example, how long you have been using a credit card or current account. It also takes into account whether there are any negative entries because bills have not been paid even after several reminders. Advertisement Points are awarded for a total of twelve understandable criteria, totalling 100 to 999. The higher the total number of points, the higher the creditworthiness. The 12 new criteria are as follows: Age of oldest credit card Time spent at current address Number of enquiries and contracts for current accounts and credit cards in the past 12 months Loan with the longest remaining term Number of enquiries in the telecommunications & (online) retail sector in the past 12 months Age of oldest bank contract Property loans Instalment loans taken out in the past 12 months Credit status Existence of an identity check Most recent credit line Issues with missed or late payments How will the new score improve things for me? According to the credit agency, the main benefit of the new system will be that customers have a much better understanding of their credit score. Using the twelve new criteria, individuals can make more informed decisions and understand how certain behaviours, like taking out another loan or cancelling a credit card, will impact their score. This should enable people to boost their credit in a more conscious way and better understand what's helping - or hindering - their credit. With reporting by DPA
