RBI in action: Bank customers have always complained that they do not update their current status in the Credit Information Companies (CIC) and bank update databases to remove loan defaults. Therefore their credit score gets spoiled and the chances of getting loan at low interest rates also reduces. Now RBI has taken a big step to resolve this complaint of customers.
Speed up data updates
The Reserve Bank of India (RBI) has issued clear instructions in this regard to CICs, banks and finance companies storing the credit history of customers. RBI has said that updating customer data should be expedited and customers should also be alerted about changes in their credit status. Let us inform you that in June 2023, RBI had imposed a total fine of more than Rs 1 crore on four CICs for failing to update credit information.
Provision for fine also
RBI has also made a provision for penalty for not resolving customer complaints within the stipulated time limit. RBI has told CICs, banks and NBFCs that if a customer complaint is not resolved within 30 calendar days from the date of the initial complaint, a compensation of Rs 100 per day should be given to the complainants. This compensation will be payable if the Bank/NBFC fails to send the updated credit information to the CIC by making necessary corrections or changes within 21 days of notification by the complainant or CIC.
Reason will also have to be given
RBI has clearly said that CICs and Credit Institutions (CIs) will have to update the credit information of customers every month. Along with this, they will also have to inform the complainant about all the action taken. The Reserve Bank has also said that the CI/CIC will also have to give reasons for rejecting the request for data correction.
Alert by sending SMS
RBI has also told CIC that if credit information reports of customers are accessed by a particular user, an alert should be sent to the customer through SMS/email wherever possible. Let us tell you that RBI has received complaints of customers not updating their credit information on time, on the basis of which these instructions have been issued.
How many CICs are there in the country?
There are four Credit Information Companies (CICs) authorized by the Reserve Bank of India in the country – TransUnion CIBIL, CRIF High Mark, Equifax and Experian. Among them, CIBIL is the market leader, reaching credit information of 60 crore people and 2,400 members covering all types of lenders. Let us tell you that CI includes banks and NBFCs regulated by RBI, they inform CIC about the credit status of customers including loan defaults.
What is a Credit Score?
Credit score is the credit history of the customer. This shows how the concerned person is in terms of loan repayment. When a customer takes a loan from banks etc., the banks send his payment information to the credit information companies on the basis of which his credit score is prepared. Higher the credit score, higher are the chances of getting a loan at an affordable rate. Apart from this, many companies also provide many benefits to people with good credit scores.
