The Reserve Bank of India (RBI) has informed lenders, financial institutions, and credit bureaus that they must resolve complaints filed by customers within 30 days or face a fine of ₹100 per day to ensure that customers’ complaints related to credit information are addressed promptly.
Introducing a Compensation Framework for Improved Credit Reporting
Additionally, the RBI has instructed CICs to pay compensation to complainants if they fail to resolve complaints within 30 calendar days, despite receiving updated credit information from CIs within 21 calendar days. This compensation framework seeks to hold CICs accountable for delays in resolving issues related to credit information.
To ensure effective implementation of the compensation framework, the RBI has given CICs and CIs a six-month timeline to put in place the necessary processes and mechanisms.
CICs’ Role in Credit Reporting
Credit Information Companies (CICs) play a vital role in maintaining the credit information of borrowers, including individuals, corporates, and small businesses. This information is accessed by banks and other lenders when making credit-related decisions. CICs collect data from various credit providers, such as banks, credit card companies, and non-bank financial institutions, making them central players in the credit ecosystem.
Past Penalties and Customer Complaints
The RBI’s call for a compensation framework is not without precedent. In June, the RBI imposed a combined penalty of ₹1.01 crore on all four major CICs for inaccuracies, incomplete data, and delays in updating credit information.
Here is the information in table format:
|Credit Information Company||Fine Amount (₹)|
|TransUnion CIBIL Ltd||₹26 lakh|
|Experian Credit Information Company of India Pvt Ltd||₹24.75 lakh each|
|Equifax Credit Information Services Pvt Ltd||₹24.75 lakh each|
|CRIF High Mark Credit Information Services Pvt Ltd||₹25.75 lakh|
Addressing Customer Concerns and Improving Credit Reporting
The need for a compensation framework arose from a significant number of customer complaints. Many borrowers reported that CICs did not promptly update their credit status, leading to difficulties in obtaining loans or credit cards. When customers tried to rectify default issues or incorrect classifications, the CICs often failed to take action within the stipulated time frame.
Additional RBI Directives
Apart from the compensation framework and the 30-day resolution mandate, the RBI issued several additional directives:
Free Full Credit Reports
CICs are now required to provide easy access to free full credit reports, including credit scores, to individuals whose credit history is available with the CIC. These reports should be accessible by prominently displaying a link on the CICs’ websites.
SMS and Email Alerts
CICs must send SMS or email alerts to customers when their credit information report (CIR) is accessed by credit institutions or other CICs. Likewise, credit institutions must notify customers when submitting information to CICs regarding defaults or days past due (DPD) in existing credit facilities.
Dedicated Nodal Points
Credit institutions are instructed to have a dedicated nodal point for CICs to address customer grievances, ensuring a streamlined process for resolving issues.