Implementation of Credit Information Reporting Mechanism subsequent to cancellation of - 10th October 2024 - Reserve Bank of India - Gazette Notification PDF
Issued by Reserve Bank of India
Read or download the official PDF of this gazette notification issued by the Reserve Bank of India on 10th October 2024.
Executive Summary & Key Takeaways
Executive Summary: This circular from the Reserve Bank of India (RBI) addresses the reporting of credit information following the cancellation of a Credit Institution's (CI) license or Certificate of Registration (CoR). It directs Credit Institutions (CIs) and Credit Information Companies (CICs) to implement a mechanism ensuring continued reporting and access to credit information for existing borrowers of such entities. The instructions must be implemented within six months of the circular's date (October 10, 2024).
Key Points / Main Content:
Reporting Mechanism for Entities with Cancelled Licenses/CoRs:
- Entities whose license/CoR has been cancelled by the RBI will be categorized as "Credit Institutions" under Section 2f(vii) of the Credit Information Companies Regulation Act (CICRA).
- These entities must continue to report credit information on borrowers onboarded and reported to CICs prior to the cancellation, until the loan lifecycle is complete or the entity is wound up, whichever is earlier.
Access to Credit Information:
- Entities with cancelled licenses/CoRs can only access Credit Information Reports (CIRs) for borrowers onboarded and reported to CICs before the cancellation.
Responsibilities of Credit Information Companies (CICs):
- CICs must not charge annual and membership fees to entities with cancelled licenses/CoRs.
- CICs must tag these entities as "License Cancelled Entities" in the CIR, based on information from the RBI website or cancellation order.
General Provisions:
- The provisions of this circular also apply to entities whose license/CoR was cancelled prior to the issuance of this circular.
- All other instructions regarding credit information reporting remain unchanged.
Impact Analysis:
Credit Institutions (CIs) including Small Finance Banks, Local Area Banks and Regional Rural Banks, excluding Payments Banks, Primary Urban Cooperative Banks, State Cooperative Banks, Central Cooperative Banks, Non-Banking Financial Companies including Housing Finance Companies, Asset Reconstruction Companies:
Impact: CIs whose license/CoR has been cancelled must continue to report credit information and can only access reports for borrowers onboarded before the cancellation. Action Required: Categorize themselves as "Credit Institutions" under Section 2f(vii) of CICRA, implement the specified reporting mechanism, and cease charging annual membership fees.
Credit Information Companies (CICs):
Impact: CICs are responsible for implementing the tagging and fee adjustments for entities with cancelled licenses/CoRs. Action Required: Implement the "License Cancelled Entities" tag, cease charging annual membership fees from affected CIs, and adjust their systems to accommodate the new reporting mechanism.
Borrowers of Entities with Cancelled Licenses/CoRs:
Impact: Ensures continuity of their credit history reporting, even after the lending institution's license has been revoked. Action Required: No direct action is required from borrowers. They should continue to service their loans as per agreed terms.