“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 credit institutions and CIC,” the RBI said in a statement. “The fortnightly reporting frequency would ensure that credit information reports provided by CICs reflect more recent information.”
RBI said this move will be beneficial to both borrowers and lenders.
“Borrowers will have the benefit of faster updation of information, especially when they have repaid the loans,” RBI said. “Lenders will be able to make better risk assessments of borrowers and also reduce the risk of over-leveraging by borrowers.”
Earlier, if a customer has availed a loan from multiple lenders, the reporting of it would be reflected in the credit bureau only after a 30-day period.
“With the reduction in this timeline to 15 days, creditors would be able to monitor accounts of borrowers in a timely manner, ensuring faster risk assessment, better decision-making in terms of lending and over a period of time, reduction in default rates, contributing to the overall health of the economy,” said Vishal Sharma, Cofounder of AdvaRisk.
Experts said that the move will make the credit tracking system of a borrower more robust, improve credit related decisions and strengthen risk monitoring.
“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,” said Rajesh Kumar, MD & CEO, TransUnion CIBIL. “This will also help in resolving consumer disputes faster based on updated data in the credit records.”
Reducing the reporting time to a fortnight will enable to build more credit prudence in the industry and help in better decisioning for lenders.
“For lenders, accurately assessing credit risk is essential to their operations and helps in reducing defaults,” said Akshay Mehrotra, Co-founder, Fibe. “On the other hand, borrowers would be able to constantly keep a track of their credit scores helping them keep a check on excessive debt. The measures by the RBI will contribute to a sustainable and responsible lending and borrowing ecosystem.”