Executive Summary:
This document addresses a parliamentary question regarding the regulatory framework governing Credit Information Companies (CICs) like TransUnion CIBIL Limited, and the misuse of credit scores. It clarifies the role of the Reserve Bank of India (RBI) in regulating CICs under the Credit Information Companies Regulation Act, 2005 (CICRA). The document also outlines measures taken by RBI to enhance grievance redressal mechanisms and customer protection in credit scoring, as detailed in 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.
* All CICs are registered with and regulated by the Reserve Bank of India (RBI).
* RBI is empowered to determine policy related to the functioning of CICs, and all CICs are bound to follow such policies.
* CICs collect, process, and collate information on trade, credit, and financial standing of borrowers, and provide credit information and credit scoring to specified users.
* CICs and Credit Institutions (CIs) are required to retain credit information for a minimum period 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 redressal of deficiencies in service by CICs or CIs.
* RBI issued Master Direction on Credit Information Reporting, 2025, which includes provisions to improve service delivery, enhance accountability, and ensure customer protection.
Provisions of Master Direction on Credit Information Reporting, 2025:
* CICs must provide access to one free full credit report, including credit score, in electronic format to individuals whose credit score is available with them.
* 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 for wrongful denial of compensation 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 through SMS or email to customers when submitting information to CICs regarding default or days past due in existing credit facilities.
* CIs and CICs must undertake Root Cause Analysis (RCA) of customer grievances at least on a half-yearly basis.
Impact Analysis:
Customers:
* Impact: Enhanced access to credit information, improved grievance redressal mechanisms, and increased protection against inaccurate or delayed credit information updates.
* Action Required: Utilize the free credit report, file complaints under RBIOS for deficiencies in service, and be aware of SMS/email alerts related to CIR access and default reporting.
Credit Information Companies (CICs):
* Impact: Increased regulatory oversight, requirement to provide free credit reports, establishment of internal ombudsman, implementation of compensation mechanisms, and enhanced notification procedures.
* Action Required: Implement provisions of the Master Direction on Credit Information Reporting, 2025, including providing free credit reports, appointing an internal ombudsman, establishing compensation mechanisms, and improving customer notification processes.
Credit Institutions (CIs):
* Impact: Requirement to send alerts for default reporting, implementation of compensation mechanisms, and undertaking Root Cause Analysis of customer grievances.
* Action Required: Implement alert mechanisms for default reporting, establish compensation mechanisms for delayed updates, and conduct Root Cause Analysis of customer grievances.
Reserve Bank of India (RBI):
* Impact: Continued responsibility for regulating and overseeing CICs and CIs, and administering the RBIOS for grievance redressal.
* Action Required: Continue to monitor and enforce compliance with CICRA and the Master Direction on Credit Information Reporting, 2025, and address customer complaints filed under RBIOS.
Key Entities Referenced
Credit Information Bureau India Limited: A credit rating agency, also known as CIBIL, that collects and provides credit information.
TransUnion CIBIL Limited: The current name of Credit Information Bureau India Limited (CIBIL).
Credit Information Companies Regulation Act, 2005: A legal framework governing the operations of Credit Information Companies (CICs) in India.
Reserve Bank of India: The central bank of India, responsible for regulating and supervising Credit Information Companies (CICs).
Credit Information Companies Regulations, 2006: Regulations pertaining to the retention of credit information collected, maintained, and disseminated by CICs and credit institutions.
Reserve Bank Integrated Ombudsman Scheme, 2021: An alternative grievance redressal mechanism extended to cover grievances against Credit Information Companies (CICs).
Master Direction on Credit Information Reporting, 2025: A directive issued by the Reserve Bank of India (RBI) to improve services, enhance accountability, and ensure customer protection in credit information reporting.
SHRI PANKAJ CHAUDHARY: The Minister of State in the Ministry of Finance.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF FINANCIAL SERVICES
LOK SABHA
UNSTARRED QUESTION NO- 3991
ANSWERED ON MONDAY, AUGUST 18, 2025/SRAVANA 27, 1947 (SAKA)
MISUSE OF CIBIL SCORE BY BANKS
3991. 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 individual's
financial data;
(c) whether the Government has received complaints regarding the 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 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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