Strengthening the Credit Reporting System and Implementing Guidelines for Credit Bureaus in India

[TechnoFino]

The credit reporting system in India needs improvement to match the standards of developed countries like the USA. As a leader in digital payments, India should strive to have a world-class credit reporting system to complement its digital banking infrastructure. Several issues have been identified in reports regarding credit reporting, and it is crucial for the Reserve Bank of India (RBI) to address these problems promptly.

To enhance grievance redressal and customer service of credit institutions (CIs) and credit information companies (CICs), the RBI has established a comprehensive framework. As part of this mechanism, CICs have been included in the Reserve Bank Integrated Ombudsman Scheme (RB-IOS). However, there are still areas that require attention and guidelines for Credit Bureaus (Credit Information Companies) should be implemented.

Here are a few specific issues that need to be addressed:

1. Insufficient grievance redressal system from Credit Bureaus (CICs): There is a need for an improved system to address customer grievances effectively. Currently, customers face difficulties when their disputes are not resolved by Credit Bureaus, who redirect them to the banks. This back-and-forth process causes inconvenience and should be resolved within a defined timeframe by the Credit Bureaus.
2. Lack of credit report locking system: Credit Bureaus in India should introduce a credit report locking system similar to that available in countries like the USA. This system would empower individuals to control access to their credit reports, preventing misuse by unauthorized entities such as banks or non-banking financial companies (NBFCs).
3. Unauthorized hard inquiries: Instances have been reported where banks or NBFCs conduct hard inquiries on customers' credit reports without their consent. It is essential for all banks and NBFCs to be directed to obtain customer consent, such as through an OTP (one-time password), before initiating any hard inquiries.

The RBI deserves recognition for its diligent efforts in actively monitoring consumer problems, formulating consumer-friendly guidelines, and undertaking various initiatives. However, it is crucial for us to highlight these issues to the RBI so that they can consider them as valuable feedback and take appropriate actions.
I kindly request everyone to share this message so that it reaches the officials at RBI.

 

[Rkr]

Even if they implement the mandatory two step OTP verification for accessing the credit reports irrespective of who has sought the report (Let it be a financial institution or user himself) whether the request is for Soft one or hard enquiry.

Pont number 2 and 3 will automatically resolved by implementing above steps.