Your CIBIL score will be updated faster as credit information companies will now get fortnightly reports from lenders, says RBI

The Reserve Bank of India (RBI) has made a significant announcement concerning credit information. The RBI governor has suggested that lenders must now provide credit information reports to credit information companies (CICs) such as CIBIL, etc., every two weeks.

Governor Shakikanta Das emphasized that timely disclosure of credit information will be beneficial for borrowers.“The fortnightly reporting frequency would ensure that credit information reports provided by CICs reflect a 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 assessment of borrowers and also reduce the risk of over-leveraging by borrowers,” he said.

"The availability of accurate credit information is vital for both lenders and borrowers. At present, lenders are required to report credit information to credit information companies (CICs) on a monthly basis or at such shorter intervals as may be agreed between the lenders and the CICs. It is proposed to increase the frequency of reporting of credit information to a fortnightly basis or at shorter intervals. Consequently, borrowers will benefit from faster updation of their credit information, especially when they repay their loans. The lenders, on their part, will be able to make better risk assessment of borrowers," said the Governor in his speech.

What might be the impact of this development

Experts say that this development will benefit individuals because good credit behaviour will reflect faster with the implementation of this change. "In turn it will help lenders equally by providing more recent data which will enable them to make better informed credit decisioning," says Satish Mehta, Founder, Athena CredXpert

Experts also say that this development might result in resolving consumer disputes faster. Rajesh Kumar, MD & CEO, TransUnion CIBIL: “This is a very progressive move which will significantly strengthen the credit information ecosystem. With more frequent data reporting by banks and credit institutions, CICs will be able to update credit records faster and this will translate into more updated data being available for making informed lending decisions by credit grantors. This will also help in resolving consumer disputes faster based on updated data in the credit records. Credit information solutions help create economic opportunity for millions of people in India, and we take our responsibility to deliver accurate data very seriously. As India’s pioneer credit information company, we work constantly to strengthen the credit information ecosystem for the public good.”

According to Joydip Gupta, APAC Business Head, Scienaptic AI, "Usually the most recent credit behaviour of a borrower is the most relevant, so having a more recent credit history definitely improves the ability of lenders to make more accurate underwriting decisions. What we need to ensure though, is that the quality of data reported by lenders should not drop as a result of such faster reporting. Currently there are a lot of missing fields or null values in the data reported to some credit bureau(s). As lenders enhance their information technology toolkit to start reporting more frequently, they should also try to improve the accuracy of data being reported."

According to Naveen Kukreja, Co-founder & CEO, Paisabazaar, “This is a significant move by the RBI, and one that hopefully leads to the eventual goal of instant reporting of credit information to the Bureaus. Once in full effect, the industry should move from about 45-50 days of delay in getting access to new credit information to around 27 days. I hope both lenders and credit bureaus keep building strong data infrastructure and capabilities, along with standardisation, to eventually move to instant reporting. It will require investment and time, but would take the retail credit industry to an even stronger position in the long run. Increase in frequency of credit information reporting would help the overall ecosystem to do better risk assessment, particularly in cases of over-leveraging and reduce multi loans phenomena to a certain extent. The second order effect should be positive for a large set of consumers in the form of better offers and pricing. This would also enable consumers to manage their credit performance better as they should see a faster impact on their credit profiles from responsible credit behaviour.”