Understanding business information landscape :
When it comes to understanding the information landscape, banks and businesses need to plan around the following 4 types of information sources and availability. This is normally with respect to the companies you want to lend to, or evaluate as a customer or supplier. You will need to understand these companies to get a better understanding of these companies before you do business with them.
- Private and Confidential information :
Such information are confidential and private information where you need the target company to share the information with you. In many cases, you will need to sign an NDA with the company. We have seen bankers, investment bankers, purchase department officials visit the target company to get a better understanding of the company. Sometimes this will involve the target company’s most recent financials, the last few months orders, etc. In order to access such information, you need to be on the verge of doing business with the target company and they in turn allow you access to non-public information.
- Bureau Information :
The concept of Bureau was setup by regulators, where adverse loan repayment related information on the business or individuals behind the business is shared with the Bureau, which in turn shares such adverse information with other bureau members. You don’t want one bank giving a loan to a business, when it is simultaneously defaulting the loan with another bank. Bureau’s can either be the approved entities by regulator and in some cases, the regulators themselves have setup such mechanisms to share information within the banking circles. Unfortunately, such information is privy to banks and other lenders. Corporates wanting to understand their customers or suppliers cannot access such information.
- Consent Based information :
With the proliferation of several structured source of information with the regulators, like GST, IT filings, bank statements, etc there is an increasing trend towards accessing such information based on consent – essentially the target company will need to provide you permission to access such information. It would probably be easier for a lender to access such information when the target company is looking to borrow. On the other hand, if the target company is a customer or a supplier, it would be a bit awkward to even ask for such information.
- Public Information :
Over the past 15 years, we have seen a proliferation of information available on companies in India. This covers various source like the MCA (financial, borrowing, shareholding, etc), Court records (legal cases from Supreme Court, High Court, District Court), rating, GST filing, news, etc. Some of these sources are available directly from the internet. In most other cases, you will need to be a registered user and get information upon payment or access documents. Such information is available publicly and it is a good first step to evaluate your potential borrower, customer or supplier. The information is quick to get, does not need permission from the target customer and helps with an initial first cut evaluation.
On the whole, there has been a significant evolution in the way one can evaluate companies in India over the past decade – and we believe this is part of the digital India journey – and you can benefit from this journey too. Ease of doing business is becoming real.
Most of the Public Information on a company can be accessed on Probe42.