RBI Increases Frequency of Credit Information Reporting to Enhance Borrower Transparency

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RBI Increases Frequency of Credit Information Reporting to Enhance Borrower Transparency

Context:

The Reserve Bank of India (RBI) has announced a new decision to increase the frequency with which lenders report credit information to Credit Information Companies (CICs).

 

About Credit Information Companies (CICs):  

  • These are organisations that collect and maintain data related to the credit history of individuals and businesses.
  • They provide this data to lenders to help them assess the creditworthiness of borrowers.
  • The major Credit Information Companies (CICs) or credit bureaus in India are TransUnionCIBIL, Equifax, Experian and Experian.

 

Significant Changes:

  • Previously, lenders such as banks and Non-Banking Financial Companies (NBFCs) reported credit information to CICs every month or at shorter intervals if agreed upon.
  • The RBI has now mandated that this reporting must be done on a fortnightly basis or even more frequently.
  • CICs will need to process the credit information they receive from lenders within five calendar days instead of the previous seven days.

 

Impact of Recent Decision of RBI:

  • This change is intended to provide a more up-to-date picture of a borrower’s financial situation, helping both borrowers and lenders.
  • The new reporting frequency will ensure that credit information reports provided by CICs reflect more recent data, which benefits both borrowers and lenders.

 

For Borrowers: They will see faster updates of their credit information, especially after repaying loans.

 

For Lenders: They will have better, more timely information to assess the risk of lending and to avoid over-leveraging by borrowers.

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