New Delhi: Lenders are looking at standardising data submission to credit information companies such as TransUnion CIBIL, Equifax, CRIF High Mark and Experian after the Reserve Bank issued show-cause notices to individual banks over data discrepancies.
The proposed move is expected to address issues such as inexplicable changes to credit scores, delays in updating loan closures, lack of response to requests for correction and identity thefts.
At present, each lender has its own format, which leads to data variation, an issue flagged by the banking regulator, leading to a rise in cases of customers facing denial of loan or reduction in credit limit.
“We are working on a common format,” said a bank executive familiar with the development.
The person said that in the last few months, some banks had received show-cause notices from the RBI on complaints regarding incorrect credit scores.
An email sent to RBI remained unanswered till press time.
The Central Bank of India, among state-run banks, will spearhead the initiative, according to another executive.
It will, after discussions with all stakeholders, submit a note, which will also have parameters to be included in the common format.
“This will be further discussed with other commercial lenders, including private banks,” he said, adding that the uniform format will be adopted by all banks.
In October 2023, the RBI came out with new regulations that mandate credit institutions and credit information companies (CICs) to pay customers Rs 100 per day if they fail to resolve complaints within 30 days.
Both banks and non-banking finance companies (NBFCs) provide credit information about individuals and companies to CICs, which, as per their internal analysis and models, generate credit scores for individuals and credit ranks for companies.
Based on these scores, the creditworthiness of an individual or business is decided, and accordingly, loan eligibility and interest rates are worked out.
“There have been issues with credit reports, and several borrowers have suffered as their interest rates were hiked or their loan limits brought down,” said the second executive quoted above, adding that this is why the RBI has been pushing for a more comprehensive and stringent framework for compensation to customers for delayed updation or rectifications of credit information.
