In an effort to simplify credit information reporting and provide more transparency, the Reserve Bank of India (RBI) has issued its Master Direction on Credit Information Reporting, a comprehensive guideline aimed at transforming the credit information environment in India dated January 6, 2025. The master directions consolidate the existing guidelines under Section 11 of the Credit Information Companies (Regulation) Act, 2005 and prescribes uniform standards for credit reporting by regulated entities such as banks, financial institutions, and non-banking financial companies (NBFCs).

It aims to harmonize the credit information reporting framework for all credit institutions and Credit Information Companies (CICs), guaranteeing consistency and clarity to all concerned, ensuring confidentiality and security of credit-sensitive information; facilitate access for consumers to credit information and redressal for grievances on the issue of credit information reporting.

KEY PROVISIONS

• This framework includes unified data formats, specific reporting schedules, and criteria for data quality, fostering interoperability and enhanced efficiency within the credit system. The directive also gives top priority to the protection of sensitive credit information, stipulating rigorous security measures to prevent unauthorized use, access, or disclosure. This includes high-strength data encryption, access control, and cybersecurity measures to safeguard consumer information from breaches and unauthorized utilization.
• All Credit Institutions (CIs), including banks and NBFCs, are now required to become members of all Credit Information Companies (CICs). This measure will help CICs to obtain detailed credit information and improve the credibility of credit reports within the financial system.
• One of the keyfeatures of the guidelines is the need for CICs to send notifications to consumers through SMS or email whenever Credit Information Report is viewed by specified users. This makes it easier for customers to get real-time notifications whenever their credit information is reviewed, and making it more transparent.
• This brings a wave of positive change for borrowers placing them more firmly in charge of their own financial futures. The strengthened measures for transparency, including compulsory alerts for access to CIR and the ease of obtaining credit reports, empower individuals with knowledge and oversight of their credit information. This transparency fosters a sense of ownership and enables one to actively check their credit well-being, spot any irregularities, and rectify if necessary.
• The standardized model for reporting of credit information optimizes credit grading procedures, speeding up loan issuance and processing procedures. Such process efficiency reduces overhead costs and customer inconvenience, making credit more quickly and easily available to borrowers. This gives rise to sounder lending judgments, reducing risks of loss and enhancing overall credit sector stability. The focus on accuracy and timely updating of credit records makes CIRs credible and current, reducing the likelihood of credit decisions being based on outdated or incorrect data.
• Incase a complaint is not settled within 30 calendar days from the date of filing, complainants are eligible for a compensation of ₹100 per calendar day, even though the CI has provided the updated credit information to the CIC within twenty-one (21) calendar days of receiving information from the complainant or the CIC. This is an attempt to strengthen the grievance redressal process and ensure consumers are sufficiently compensated for the delay.
• RBI has laiddown specific guidelines for disclosure of credit information to third parties on the basis of the individual’s consent. Credit Information Companies (CICs) are currently sharing individual credit information with non-specified users, contingent upon the consent of the individual involved. To mitigate risks associated with potential misuse of this sensitive data, CICs are required to establish a comprehensive due diligence and control mechanism prior to such information sharing. This process should include a thorough evaluation of all available data regarding the entity with whom the credit information is shared.

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LLM, BA LLB Meghna Anand