New Delhi: The Reserve Bank of India (RBI) has issued comprehensive guidelines to credit bureaus, notably impacting the evaluation of CIBIL (Credit Information Bureau India Limited) scores. Effective from April 26, 2024, these guidelines aim to enhance transparency and communication between financial institutions and borrowers.
Under the new directives, banks and Non-Banking Financial Companies (NBFCs) are required to promptly relay credit report information to customers via SMS or email each time their credit report is accessed. In cases where a loan application is declined, lending institutions must provide clear reasons for the rejection to the customer and inform the respective credit institution accordingly.
Moreover, the RBI emphasizes the importance of notifying customers before reporting defaults if they are unable to meet loan repayment obligations. Lending institutions are instructed to share all relevant information through electronic communication channels.
In a bid to streamline grievance resolution, the RBI has outlined a penalty provision, stating that credit information companies failing to address customer complaints within 30 days will incur a penalty of Rs 100 per day.
Credit Information Companies (CIS), responsible for generating CIBIL scores based on customer credit histories and other financial activities, play a pivotal role in the loan approval process across the country. While a high credit score opens doors to more favorable loan terms, the guidelines make it clear that banks consider various factors beyond the CIBIL score when assessing loan applications.
Maintaining a good credit score remains crucial for individuals seeking loans, as a lower score may impact the loan amount and terms offered by financial institutions. The RBI’s latest guidelines underscore the importance of transparency, timely communication, and fair lending practices in the financial ecosystem.
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