The Reserve Bank of India (RBI) has issued a directive to lenders, financial institutions, and credit bureaus, outlining the need to promptly resolve customer complaints. If they fail to do so within 30 days, they will face daily fines of ₹100.
In this move aimed at bolstering customer service and ensuring the accuracy of credit information, the RBI has instructed credit information companies (CICs) and credit institutions to implement a compensation framework for addressing delayed credit information updates.
Specifically, the RBI stated, “A CIC shall pay compensation to the complainant if the CIC has failed to resolve the complaint within 30 calendar days of being informed by the complainant or a CI, despite the CI having furnished the updated credit information to the CIC within 21 calendar days of being informed by the complainant or the CIC.” This compensation framework should be established and put into practice within the next six months, according to the RBI’s instructions.
CICs play a vital role in maintaining the credit information of various borrowers, including individuals, corporations, and small businesses. Banks and other lenders regularly access this information, which is collected from a range of credit providers, including banks, credit card companies, and non-bank financial institutions.
The RBI’s decision to introduce a compensation framework comes after it received numerous complaints from customers about CICs failing to update borrower status in a timely manner. Customers have reported that when they have rectified issues related to defaults or incorrect classifications, CICs have often failed to respond within the stipulated timeframe. As a result, many customers have faced difficulties in obtaining loans or credit cards.
Additionally, the RBI has called for CICs to provide easy access to a free full credit report, including a credit score, once a year for individuals whose credit history is available with the CIC. This access should be prominently displayed on the CICs’ websites. Furthermore, the RBI has mandated that CICs send SMS or email alerts to customers when their credit information report (CIR) is accessed by credit institutions (CIs) or other CICs.
The regulator has also directed credit institutions to send similar alerts to customers when they submit information to CICs regarding defaults or days past due (DPD) in existing credit facilities. Additionally, CIs must establish a dedicated nodal point to address customer grievances related to CICs.
These measures are intended to enhance customer protection and the efficiency of credit reporting, ensuring that customer complaints are addressed in a timely manner and that credit information remains accurate and up-to-date.
