Brief Overview:
With an aim to enable lenders to make informed credit decisions, the RBI has issued a notification on ‘Frequency of reporting of credit information by Credit Institutions to Credit Information Companies’ dated 8th August 2024 (“Notification”). The Notification changes the frequency for updating and processing of credit information by credit information companies (“CICs”) and credit institutions (“CIs”).
What has changed?
- CICs and CIs are required to 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 between the CI and the CIC. Previously, the frequency for the same was on a monthly basis.
- The fortnightly submission of credit information by CIs to CICs is to be ensured within 7 (seven) calendar days of the relevant reporting fortnight.
- CICs must ingest such credit information data received from the CIs within 5 (five) calendar days of receipt. Previously, the period was 7 (seven) calendar days.
- CICs are required to report non-compliant CIs to the RBI every 6 (six) months.
When does the Notification become effective?
From 1st January 2025.
JC Takeaway:
Considering the faster turnaround time in credit underwriting through digital processes, the Notification will allow lenders to make more accurate risk assessments. Additionally, regular reporting of non-compliant CIs to the RBI increases accountability and oversight. However, the requirement for fortnightly updates may impose extra administrative and operational burdens on both CICs and CIs.
For further details, please see:
https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12718&Mode=0
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