RBI's big order on CIBIL score! asked credit information companies to update…, will this benefit or harm you?
RBI Deputy Governor M Rajeshwar Rao has asked credit information companies like TransUnion Cibil to switch to real-time data reporting from fortnightly at present. RBI On CIBIL Score
Speaking at a conference organised by Cibil here on Tuesday, Rao said quicker relaying of data from the CICs will help in deepening trust, efficiency and transparency in the system for everybody.
'We must aspire to more frequent updates. Real-time or near-real-time credit reporting will improve underwriting precision, enable timely reflection of borrower actions like loan closures or repayments and deliver a superior consumer experience,' Rao said.
Admitting that this entails costs because of investments in technology, process reengineering, and change management, Rao underlined that the benefits will far outweigh the costs. Whom Will It Benefit?
This is a significant relief for those seeking home loans, personal loans, or auto loans. In its latest order, the RBI said that information related to CIBIL scores must now be provided in real-time, as opposed to the earlier practice where companies updated it once every 15 days. This decision is expected to offer considerable benefits to loan applicants.
Rao also asked the CICs and other companies competing with Cibil, including Experian and CRIF High Mark, to move towards having a 'unique borrower identifier', which is uniform across the system.
'Another key challenge is identity standardisation. CICs rely on credit institutions to provide accurate and validated IDs. Without this, duplication and misreporting remain risks,' he said, explaining the rationale for having such a system.
Rao also exhorted the industry to ensure that innovation is 'responsible and accountable', and not at the cost of an individual's rights to data privacy.
(With Inputs From PTI)
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