Executive Summary:
The Ministry of Finance addressed concerns regarding credit score decreases of loan applicants and non-compliance by Credit Information Companies (CICs). The Reserve Bank of India (RBI) is empowered under the Credit Information Companies Regulation Act, 2005 (CICRA) to regulate CICs. The RBI has taken measures to strengthen grievance redressal mechanisms, including extending the Reserve Bank Integrated Ombudsman Scheme, 2021 (RBIOS) to cover grievances against CICs.
Key Points / Main Content:
Regulatory Framework:
* CICs provide Credit Information Reports (CIRs), including credit scores, based on borrower credit history, which are used by Credit Institutions (CIs) for credit assessment.
* CICs are governed by CICRA, rules/regulations, and RBI guidelines.
* RBI can determine policy, issue directions, inspect accounts, and impose penalties for non-adherence to guidelines.
Grievance Redressal:
* Borrowers can request CICs or CIs to correct/update credit information, which must be addressed within 30 days.
* RBIOS covers grievances against CICs for deficiency in service.
RBI Directives for Enhanced Service:
* CICs must provide one free full credit report (including score) electronically to individuals.
* CICs must appoint an Internal Ombudsman for internal grievance review.
* CICs and CIs must implement a compensation mechanism of Rs. 100 per day for delays exceeding 30 days in updating/rectifying credit information.
* Complainants can approach RBI Ombudsman under RBIOS for wrongful denial of compensation.
* CICs must notify customers via SMS/email when their CIR is accessed.
* CIs must send SMS/email alerts to customers regarding default or days past due being reported to CICs.
* CIs and CICs must undertake Root Cause Analysis (RCA) of customer grievances at least semi-annually.
Impact Analysis:
Borrowers/Loan Applicants:
Impact: Benefit from enhanced transparency, free credit reports, quicker resolution of grievances, and compensation for delays.
Action Required: Utilize available mechanisms for credit information correction, grievance redressal, and compensation claims.
Credit Information Companies (CICs):
Impact: Subject to stricter compliance requirements, including providing free credit reports, appointing Internal Ombudsmen, and implementing compensation mechanisms.
Action Required: Implement the directives regarding free credit reports, Internal Ombudsmen, compensation mechanisms, customer notifications, and Root Cause Analysis of grievances.
Credit Institutions (CIs):
Impact: Need to ensure accurate and timely credit information reporting and implement compensation mechanisms for delays in updating credit information.
Action Required: Implement directives regarding customer alerts for default reporting, compensation mechanisms, and Root Cause Analysis of grievances.
Key Entities Referenced
MINISTRY OF FINANCE: A department of the Government of India.
DEPARTMENT OF FINANCIAL SERVICES: A department under the Ministry of Finance, Government of India.
DR. SAMBIT PATRA: Member of Parliament who raised the question in Lok Sabha.
SHRI PANKAJ CHAUDHARY: Minister of State for Finance who provided the answer in Lok Sabha.
Credit Information Companies: Companies that provide Credit Information Report CIR, including credit score.
Credit Information Companies Regulation Act, 2005 CICRA: The act governing the functioning of Credit Information Companies CICs.
Reserve Bank of India RBI: The central bank of India, which regulates CICs.
Reserve Bank Integrated Ombudsman Scheme, 2021 RBIOS: Alternate grievance redressal mechanism extended to cover grievances against CICs.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF FINANCIAL SERVICES
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LOK SABHA
UNSTARRED QUESTION NO. 3616
ANSWERED ON MONDAY, 11 AUGUST, 2025/ SRAVANA 20, 1947 (SAKA)
DECREASE IN CREDIT SCORE OF LOAN APPLICANTS
†3616 DR. SAMBIT PATRA
Will the Minister of FINANCE be pleased to state:
(a) whether the Government has taken cognizance of complaints regarding decrease in the
credit score of eligible loan applicants and declaring the applicants ineligible in a discretionary
manner by companies operating in the field of Credit Information;
(b) if so, the details of the corrective measures taken in this regard;
(c) whether the Government has received any complaints regarding the non-compliance of
stipulated rules and guiding principles by the companies operating in the field of Credit
Information and if so, the details thereof;
(d) whether the Government proposes to strengthen existing grievance redressal mechanism
in the light of increasing complaints by loan applicants against said companies and if so, the
details thereof; and
(e) whether the Government is contemplating upon the constitution of a Committee to review
the functioning of companies operating in the field of Credit Information and if so, the details
thereof?
ANSWER
MINISTER OF STATE FOR FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) to (e): Credit Information Report (CIR), including credit score, is provided by Credit Information
Companies (CICs) based on the credit history of borrowers, which are considered by Credit
Institutions (CIs) for assessment of credit facilities. Based on the credit information furnished by CIs,
credit scores are derived by CICs through respective proprietary models.
CICs are governed by the provisions of Credit Information Companies (Regulation) Act, 2005
(CICRA), the rules and regulations made thereunder, and guidelines issued by the Reserve Bank ofIndia (RBI) from time to time. The extant framework of CICRA empowers RBI to determine policy
in relation to functioning of CICs, issue directions, inspect the book of accounts and impose penalty
on CICs for non-adherences to the extant guidelines.
It is provided in CICRA that a borrower or client may request the concerned CIC or the CI for
correction/updation of his credit information, and the concerned CIC or CI are required to take
appropriate steps to update the credit information within thirty days of being requested to do so.
Further, RBI has extended the alternate grievance redressal mechanism under Reserve Bank-
Integrated Ombudsman Scheme, 2021 (RBIOS) to cover grievances against CICs also. In case of
being aggrieved by an act or omission of a CIC or CI, resulting in deficiency in service, the customer
can file a complaint under RBIOS for redressal.
Also, RBI has proactively taken measures for strengthening and improving the efficacy of the
grievance redress mechanism and customer service provided by the CIs and CICs, under the broad
framework of CICRA, 2005. RBI has issued Master Direction on Credit Information Reporting,
which, inter alia, include following provisions to improve delivery of services to the common man:
(i) CICs have been directed to provide access to one free full credit report, including credit
score, in an electronic format, to individuals whose credit score is available with them.
(ii) CICs, with a view to strengthen the internal grievance redress mechanism by enabling a
review of customer complaints before their rejection, have been directed to appoint Internal
Ombudsman to act as an independent apex level authority within the CIC.
(iii) CICs and CIs have been directed to implement the compensation mechanism for delayed
updation or rectification of credit information, wherein complainants are entitled to a
compensation of Rs.100 per calendar day in case their complaint is not resolved within a
period of thirty calendar days.
(iv) In case of wrongful denial of compensation by CIs or CICs, the complainant can approach
RBI Ombudsman under RBIOS.
(v) CICs have been directed to notify customers via SMS or email, when their CIR is accessed
by the Specified Users and such enquiry reflects in the CIR of the borrower.
(vi) CIs have been directed to send alerts through SMS or email to customers, while submitting
information to CICs regarding default or days past due in existing credit facilities
(vii) CIs and CICs have been directed to undertake Root Cause Analysis (RCA) of the customer
grievances at least on a half-yearly basis.
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