RBI shortens the frequency of reporting by lenders to Credit Information Companies(CIC)

The Reserve Bank of India in exercise of the powers conferred by sub-section (1) of section 11 of the Credit Information Companies (Regulation) Act, 2005 (CICRA, 2005), directed that Credit Information Companies (CICs) and Credit Institutions (CIs )shall keep the credit information collected/maintained by them updated regularly on a fortnightly basis (i.e., as on 15th and last day of the respective month) or at such shorter intervals as mutually agreed upon between the CI and the CIC. The fortnightly submission of credit information by CIs to CICs shall be ensured within seven (7) calendar days of the relevant reporting fortnight. Further, as directed vide circular DoR.FIN.REC.49/20.16.003/2023-24 dated October 26, 2023, CICs are required to ingest credit information data received from the CIs, as per their data acceptance rules, within seven (7) calendar days of its receipt. This is now being revised to five (5) calendar days of its receipt.

Accordingly, CICs shall provide a list of CIs that are not adhering to the fortnightly data submission timelines to the Department of Supervision, Reserve Bank of India, Central Office at half-yearly intervals (as of March 31 and September 30 each year) for information and monitoring purposes. The above instructions of the Reserve Bank of India shall be effective from January 1, 2025. However, the CIs and CICs are encouraged to give effect to these instructions as expeditiously as feasible but not later than January 1, 2025. CICs and CIs that contravene or default in adherence to the above directions shall be liable for penal action as per the provisions of CICRA, 2005.

A Credit Information Company (CIC) is an independent third-party agency registered under CIC laws that collects financial data of individuals about their loans, credit cards, and other related information and shares it with its members, who generally happen to be banks and other financial institutions. The Credit Information Companies (Regulation) Act, 2005 (“CIC Act”), is legislation enacted by the Government of India to regulate the actions of credit information companies in India (“CICs”) in India and to facilitate the efficient distribution of credit as well as for matters connected to the same.

The lending institution from where you have taken a loan or credit card, reports data related to your borrowings, payment history, regularity in payment, etc. to a credit bureau. This data is reported every month and the same gets updated in the database of the credit bureau. Based on this data, the credit bureau calculates your credit information report (CIR) and credit score. This report primarily consists of information related to the loans you have taken, your credit card spending, monthly payment track records, and outstanding amounts across different banks and financial institutions. When you approach a lending institution for loans, that institution refers to your CIR or credit score and assesses your credibility and worth for the amount you have asked to borrow.

At present credit institutions (CIs) are required to report the credit information of their borrowers to credit information companies (CICs) at monthly or such shorter intervals as mutually agreed between the CI and CIC. To provide a more up-to-date picture of a borrower’s indebtedness, it has been decided to increase the frequency of reporting of credit information to CICs from monthly intervals to fortnightly basis or at such shorter intervals as mutually agreed between the CI and CIC. The fortnightly reporting frequency would ensure that credit information reports provided by CICs reflect more recent information. This will be beneficial to both borrowers and lenders (CIs). Borrowers will have the benefit of faster updation of information, especially when they have repaid the loans. Lenders will be able to make better risk assessments of borrowers and reduce the risk of overleveraging by borrowers. Necessary instructions will be issued shortly.