The Reserve Bank of India (RBI) has recently taken significant steps to address the increasing number of customer complaints against Credit Information Companies (CICs). This move reflects the RBI’s commitment to ensuring the accuracy and reliability of credit reporting in India, which plays a crucial role in the country’s financial system.
Key Developments and RBI’s Actions
- Rising Customer Complaints: The number of complaints lodged by customers against CICs has been on the rise, prompting the RBI to scrutinize these firms’ operations more closely. This increase in complaints primarily revolves around issues of inaccurate or incomplete credit information maintained by CICs.
- Fines Imposed on Credit Bureaus: In June 2023, the RBI fined all four major credit bureaus in India approximately ₹25 lakhs each. This action was taken as these bureaus were found to be maintaining inaccurate and incomplete information about their customers.
- Focused Meeting with CICs: RBI Deputy Governor Swaminathan J. held a meeting with the top executives of these CICs. In this meeting, he outlined several areas needing immediate attention to address customer concerns. These areas include improving data quality, ensuring timely redressal of customer complaints, strengthening the internal ombudsman framework, streamlining the process for handling data correction requests, enhancing cybersecurity and data privacy, and addressing concerns related to the usage of data for consulting and analytics.
RBI’s New Compensation Framework
The RBI introduced a significant compensation framework, effective six months from its release, to ensure prompt and accurate credit reporting and to hold CIs and CICs accountable:
- Compensation for Delayed Resolution: Customers filing complaints about delayed credit information updates are now entitled to receive compensation of Rs 100 for each day beyond 30 calendar days from the date of filing, if their complaint remains unresolved.
- Roles and Responsibilities of CIs and CICs: Under this framework, credit institutions are mandated to update credit information promptly. CICs are responsible for resolving customer complaints within 30 calendar days, provided they receive updated information from CIs within 21 calendar days.
- Information and Proportional Compensation: Both CIs and CICs are required to inform complainants about the actions taken on their complaints, including reasons for rejection. If there are delays beyond 30 calendar days, compensation is apportioned among the involved CIs and CICs proportionately.
- Resolution and Recourse for Customers: The resolution date is considered when the rectified Credit Information Report (CIR) is sent to the complainant. In case of wrongful denial of compensation, complainants can approach the RBI Ombudsman or the Consumer Education and Protection Cell (CEPC) at RBI Regional Offices.
Impact and Significance
- Enhancing Transparency and Accountability: This proactive approach by the RBI is expected to enhance transparency, accountability, and customer satisfaction in credit reporting. It underscores the central bank’s commitment to maintaining the integrity of the financial system and protecting consumer rights.
- Improving Credit Reporting Practices: The steps taken by the RBI are aimed at improving the overall functioning and reliability of the credit information system, which is pivotal in the context of India’s growing economy and the increasing reliance on credit facilities by individuals and businesses.