A
credit report is essential for prospective borrowers to obtain credit
quickly.
Reserve
Bank of India vide its Notification No:-RBI/2014-2015/405 DBR.No.CID.BC.60/20.16.056/2014-15
dt.January 15, 2015, has advised all:
- All Scheduled Commercial Banks (including RRBs & LABs),
- All India Notified Financial Institutions, and
- All Credit Information Companies
i.e all Credit Institutions (CIs) to become members of all CICs and submit data
(including historical data) to them.
At present there
are four CICs, viz. Credit Information
Bureau (India) Limited, Equifax Credit Information Services Private Limited,
Experian Credit Information Company of India Private Limited and CRIF High Mark
Credit Information Services Private Limited have been granted Certificate of
Registration by RBI.
In terms of
Section 15 of the Credit Information Companies (Regulation) Act, 2005 (CICRA),
every Credit Institution shall become member of at least one CIC. Further,
Section 17 of CICRA stipulates that a CIC may seek and obtain credit
information from its members (Credit Institution / CIC) only.
As a result,
when a Specified User, as defined in CICRA and Credit Information Companies
Regulations, 2006, obtains credit information on a particular borrower/client
from a CIC, it gets only such information that has been provided to the CIC by
its members.
This does not include credit history
related to those non-member Credit Institutions with which the borrower/client
has/had a current or a past exposure.
To overcome this
problem of incomplete/inaccurate credit information, pros and cons of certain
possible alternatives have been discussed in the Report. These alternatives
along with suggestions/comments obtained from IBA and the CICs have been
examined by RBI.
It has
been decided that the best option would be to mandate all Credit Institutions
to become members of all CICs and moderate the membership and annual fees
suitably.
Hence,
RBI has advised that All Credit
Institutions (CIs) shall become members of all CICs and submit data (including
historical data) to them.
Further, CICs
and CIs shall keep the credit information collected/maintained by them, updated
regularly on a monthly basis or at such shorter intervals as may be mutually
agreed upon between the CI and the CIC.
RBI
has also fixed the upper cap of membership fees that the CICs can charge CIS to
become their members and the annual fees. Accordingly, the one-time membership
fee charged by the CICs, for CIs to become their members, shall not exceed
Rs.10,000 each. The annual fees charged by the CICs to CIs shall not exceed
Rs.5000 each.
The
ground reality for the prospective borrowers will drastically change. Each CIC
has its own format for scoring and reporting. In case of any aberration in any
one CIC report, the prospective buyer has to satisfactorily reply to the Credit
Institution queries. This will increase the TAT to obtain credit.
One
option to reduce such aberrations
is to mandate by law to provide consumers to one free comprehensive disclosure of all of
the information in their credit file from each of the four national credit
reporting companies once every 12 months through a Central Source.
Trust
RBI will shortly issue guidelines in this regard. This can be similar to USAs Fair
Credit Reporting Act
