MONEY
RBI tells ARCs to furnish loan data to credit bureaus in a standard manner
- IBJ Bureau
- Oct 11, 2024
The Reserve Bank of India (RBI) on Thursday directed asset reconstruction companies (ARCs) to establish a standard operating procedure for providing information to credit bureaus. The move is aimed at harmonising loan data submission norms for ARCs with those governing financial institutions.
In its circular, the RBI stressed that ARCs – firms that buy and resolve bad loans from financial institutions – gave “top priority” to customers’ grievance redress as well as timely submission and update of loan data.
The central bank has been publicly asking supervised entities to ensure compliance with norms and that consumer interest is protected.
The records provided to credit bureaus were to be updated regularly and no instances of repayment were to be left unreported, the RBI said.
These guidelines would harmonise rules for ARCs related to credit bureaus with those for banks and non-banks, the RBI added.
Credit bureaus compile credit scores and reports based on individuals’ borrowing history, payment behaviour and borrowing patterns.
Banks and non-banking financial companies share data with credit bureaus to help prevent defaults and facilitate responsible lending decisions as well as track borrowers’ credit history.
TransUnion CIBIL, Experian, Equifax and CRIF High Mark are four such credit bureaus that operate under the central bank’s guidelines.
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