RBI introduces new regulations for credit information companies | Fusion - WeRIndia

The Reserve Bank of India (RBI) has mandated Credit Information Companies (CICs) to alert customers whenever their Credit Information Report is accessed by banks or non-banking finance companies (NBFCs).

The move is aimed at enhancing transparency and empowering borrowers.

This directive, set to be effective within six months, underscores the RBI’s commitment to safeguarding consumer interests in the lending landscape.

CICs, such as TransUnion CIBIL Ltd, Equifax India, and CRIF High Mark, play a pivotal role in maintaining and analyzing credit information.

They generate credit scores for individuals and credit ranks for companies based on creditworthiness and past credit history provided by banks and NBFCs.

A high credit score opens doors to attractive loan rates, while a lower score may impact a borrower’s ability to secure credit.

To further empower borrowers, the RBI has mandated that CICs provide free access to a Full Credit Report, including credit scores, once a year to individuals.

This move aims to facilitate easy monitoring of credit history and ensure consumers have the necessary information to make informed financial decisions.

Recognizing the importance of accurate credit information, the RBI has outlined a process for customers to rectify discrepancies in their Credit Information Reports.

Banks and NBFCs are required to communicate the reasons for rejecting requests for data correction, facilitating a clearer understanding for customers.

Additionally, CICs are expected to conduct periodic reviews of their algorithms, addressing any issues identified through a root-cause analysis of complaints.

The central bank has emphasized the importance of transparency by directing CICs to disclose complaint details on their websites. Furthermore, CICs must adhere to a stringent timeline for incorporating credit information data into their databases, ensuring prompt and efficient processing.

These regulatory changes mark a significant step towards a more transparent and consumer-friendly lending environment.

By granting borrowers greater visibility into their credit information and fostering accountability among credit institutions, the RBI aims to promote financial inclusivity and responsible lending practices.

Borrowers can now navigate the credit landscape with confidence, armed with the knowledge and tools needed to make informed financial decisions.

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