Executive Summary:
This document addresses questions regarding the regulatory framework governing Credit Information Companies (CICs) like TransUnion CIBIL Limited, potential misuse of credit scores, and measures to enhance consumer protection. It clarifies the role of the Reserve Bank of India (RBI) in regulating CICs under the Credit Information Companies Regulation Act, 2005 (CICRA). Furthermore, it details the grievance redressal mechanisms and recent directives issued by RBI to improve service delivery and accountability within the credit scoring system, including the Master Direction on Credit Information Reporting, 2025.
Key Points / Main Content:
Regulatory Framework for CICs:
* CICs, including TransUnion CIBIL Limited (formerly Credit Information Bureau India Limited), are governed by the Credit Information Companies Regulation Act, 2005 (CICRA) and its associated rules and regulations.
* RBI regulates and registers all CICs and is empowered to determine policies related to their functioning.
* CICs are mandated to collect, process, and collate information on borrowers' trade, credit, and financial standing, and provide credit information and scoring to specified users.
* CICs and Credit Institutions (CIs) must retain credit information for a minimum of seven years.
Grievance Redressal and Customer Protection:
* RBI has extended the Reserve Bank Integrated Ombudsman Scheme, 2021 (RBIOS) to cover grievances against CICs.
* Customers can file complaints under RBIOS for deficiencies in service resulting from an act or omission by a CIC or CI.
* RBI issued the Master Direction on Credit Information Reporting, 2025, including provisions to enhance accountability and customer protection.
Key Directives from RBI:
* CICs must provide individuals with one free full credit report, including their credit score, in electronic format.
* CICs must appoint an Internal Ombudsman to review customer complaints before rejection, strengthening the internal grievance redressal mechanism.
* CICs and CIs must implement a compensation mechanism for delayed updation or rectification of credit information.
* Complainants can approach the RBI Ombudsman under RBIOS if compensation is wrongfully denied by CIs or CICs.
* CICs must notify customers via SMS or email when their Credit Information Report (CIR) is accessed by specified users.
* CIs must send alerts via SMS or email to customers when submitting information to CICs regarding default or days past due.
* CIs and CICs must undertake Root Cause Analysis (RCA) of customer grievances at least semi-annually.
Impact Analysis:
Consumers:
Impact: Enhanced transparency and control over their credit information, improved grievance redressal mechanisms, and potential compensation for delays or inaccuracies.
Action Required: Be aware of the availability of a free annual credit report and the option to file complaints under RBIOS for service deficiencies. Monitor SMS/email alerts regarding CIR access and default reporting.
Credit Information Companies (CICs):
Impact: Increased regulatory oversight, enhanced internal grievance redressal processes, and the requirement to provide free credit reports and implement compensation mechanisms.
Action Required: Implement the directives outlined in the Master Direction on Credit Information Reporting, 2025, including appointing an Internal Ombudsman, establishing a compensation mechanism, and providing free credit reports.
Credit Institutions (CIs):
Impact: Increased responsibility for accurate and timely reporting of credit information and the need to implement compensation mechanisms for delays or inaccuracies.
Action Required: Implement the directives outlined in the Master Direction on Credit Information Reporting, 2025, including sending alerts to customers regarding default reporting and participating in Root Cause Analysis of customer grievances.
Reserve Bank of India (RBI):
Impact: Continued responsibility for regulating and overseeing CICs and CIs, and managing the grievance redressal process through RBIOS.
Action Required: Continue to monitor the implementation of the Master Direction on Credit Information Reporting, 2025, and address consumer complaints filed under RBIOS.
Key Entities Referenced
Credit Information Bureau India Limited CIBIL: A credit information company (CIC) that collects and provides credit information and credit scores. It was formerly known as Credit Information Bureau India Limited.
SHRI S VENKATESAN: Member of Parliament who raised a question in Lok Sabha regarding the misuse of CIBIL score.
SHRI KODIKUNNIL SURESH: Member of Parliament who raised a question in Lok Sabha regarding the misuse of CIBIL score.
FINANCE: The Ministry of Finance, the minister of which was being asked questions in the Lok Sabha.
Credit Information Companies Regulation Act, 2005 CICRA: The legal framework governing the operations of Credit Information Companies (CICs) in India.
Reserve Bank of India RBI: The central bank of India, responsible for regulating and overseeing the functioning of CICs.
Reserve Bank Integrated Ombudsman Scheme, 2021 RBIOS: An alternate grievance redressal mechanism extended by RBI to cover grievances against CICs.
Master Direction on Credit Information Reporting, 2025: RBI guidelines aimed at improving service delivery, enhancing accountability, and ensuring customer protection in credit information reporting.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF FINANCIAL SERVICES
LOK SABHA
UNSTARRED QUESTION NO- 3456
ANSWERED ON MONDAY, AUGUST 11, 2025/SRAVANA 20, 1947 (SAKA)
MISUSE OF CIBIL SCORE BY BANKS
3456. SHRI S VENKATESAN:
SHRI KODIKUNNIL SURESH:
Will the Minister of FINANCE be pleased to state:-
(a) whether the Credit Information Bureau (India) Limited (CIBIL) and other credit rating
agencies are governed under any specific legal or regulatory framework in the country;
(b) if so, the details of the laws or regulations that empower and regulate the operations of
CIBIL, particularly in regard to the collection, storage and sharing of individuals' financial
data;
(c) whether the Government has received any complaints regarding transparency, reliability
or potential misuse of CIBIL scores by banks, NBFCs or other financial institutions; and
(d) whether the Government proposes to bring about reforms or introduce any legislation to
enhance accountability and ensure consumer protection in the credit scoring system and if
so, the details thereof?
ANSWER
THE MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) and (b): TransUnion CIBIL Limited, which was formerly Credit Information Bureau
(India) Limited and referred to as “CIBIL” is one of the credit information companies
(CICs). CICs are governed by the provisions of the Credit Information Companies
(Regulation) Act, 2005 (CICRA), the rules and regulations made thereunder. All CICs are
registered with and regulated by the Reserve Bank of India (RBI). In terms of provisions of
CICRA, RBI is empowered to determine policy in relation to functioning of CICs and all
CICs are bound to follow such policies.
In terms of provisions of CICRA, functions of CICs include, inter alia, the following—
(i) to collect, process and collate information on trade, credit and financial standing of the
borrowers;
(ii) to provide credit information and credit scoring to its specified users.Further, as per the Credit Information Companies Regulations, 2006, every CIC and credit
institution (CI) are required to retain credit information collected, maintained and
disseminated by them for a minimum period of seven years.
(c) and (d): RBI has proactively taken measures for strengthening and improving the efficacy
of the grievance redressal mechanism and customer service provided by CIs and CICs, under
the broad framework of CICRA, 2005. 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.
RBI has issued Master Direction on Credit Information Reporting, 2025, which, inter alia,
include following provisions to improve delivery of services, enhance accountability and
ensure customer protection 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 redressal 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.
(iv) In case of wrongful denial of compensation by CIs or CICs, the complainant can
approach the RBI Ombudsman under RBIOS.
(v) CICs have been directed to notify customers via SMS or email, when their Credit
Information Report (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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