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Mint
03-07-2025
- Business
- Mint
RBI to fix credit report errors — here's how a big change will impact your credit score
In a major move to enhance credit score accuracy and minimise reporting discrepancies, the Reserve Bank of India (RBI) has proposed making a unique borrower identification number mandatory for all loan accounts. As reported by the Times of India, this initiative is expected to bring greater transparency and consistency to the country's credit information ecosystem. "Credit information companies rely on credit institutions to provide accurate and validated IDs. Without this, duplication and misreporting remain risks. We must move towards a unique borrower identifier, which is secure, verifiable, and consistent across the system," RBI deputy governor M Rajeshwar Rao said in his keynote address at the 25th anniversary of TransUnion Cibil. The RBI's initiative comes in the wake of frequent complaints from personal loan borrowers about disputes and inaccuracies in their credit reports. Which often are a cause of mismatches in personal details or duplication of records. Hence, by the introduction of a new borrower ID, the central bank aspires to ensure that each loan account is accurately linked to the right individual, thus reducing the risk of errors, disputes and mistakes that can negatively influence a person's creditworthiness and credit report. Further, this unique identifier will be used by all banks and non banking financial institutions i.e., NBFC's while reporting credit data to respective credit bureaus. According to the RBI this step will facilitate in streamlining the entire process of credit assessment. It will also make it easier for lending institutions to check borrower information and for consumers to maintain a clean credit history. This move is also expected to bring the number of disputes related to credit report inaccuracies down, which has been a constant problem for borrowers in the country. Industry experts believe that this particular reform will be seen as a positive development that will boost the confidence of the entire financial sector. It will also empower consumers. Now with more credible and accurate credit data, lending institutions will be in a better position to take decisions on loan disbursals. Borrowers on the other hand will also have greater control on their financial profiles. Do keep in mind that, the RBI proposal is currently open for public feedback. Once it is implemented it is likely to set a new benchmark for credit reporting standards in the country. This initiative elaborates on the central bank's commitment to guard and protect consumer interests and foster a robust, clean and transparent credit infrastructure. Disclaimer: The information in this article is for general awareness and is based on publicly available sources. The RBI's proposal is currently under review and may be subject to change. Readers should refer to official RBI communications or consult financial professionals for the latest updates and personalized advice.
Time of India
02-07-2025
- Business
- Time of India
RBI seeks 'borrower ID' to reduce credit score errors
RBI MUMBAI: RBI has mooted a unique, secure borrower identifier to avoid duplication and misreporting of data with credit bureaus, and to improve loan access for borrowers. "Credit information companies rely on credit institutions to provide accurate and validated IDs. Without this, duplication and misreporting remain risks. We must move towards a unique borrower identifier, which is secure, verifiable, and consistent across the system," RBI deputy governor M Rajeshwar Rao said in his keynote address at the 25th anniversary of TransUnion Cibil. He stressed the importance of better data practices for empowering borrowers. The suggestion comes as RBI pushes for a unified lending interface - a digital platform that lets lenders access verified borrower data. Much like UPI lets users send money to any bank, ULI allows multiple lenders to offer credit to a single borrower. Rao said that RBI is testing use of programmable digital rupees (CBDC) to give loans with restricted acceptance of the digital currency. This would start with a pilot for tenant farmers under the kisan credit card scheme. If successful, this could help extend collateral-free loans to small businesses, street vendors, and artisans, while creating digital records that make future lending easier. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Tinnitus: what this grandson discovered will surprise you Hearing Magazine Undo The deputy governor said that RBI has taken several policy measures taken to reduce information asymmetry, enhance data quality and improve customer satisfaction. These included free access to full credit reports, appointment of internal ombudsmen, and redressal frameworks linked to delayed corrections. With the introduction of the Data Quality Index and mandatory disclosures on wilful defaulters, he said, CICs are now more transparent and accountable. Rao also drew attention to the rapid expansion of digital infrastructure in credit delivery. "The convergence of Jan Dhan accounts, Aadhaar and mobile phones, popularly known as the JAM trinity, UPI and ULI, represents a significant advancement in India's digital lending infrastructure," he said. Rao noted the potential of alternative data, AI and machine learning in expanding access to underserved borrowers. "It seems that time is not far when alternative data will no longer be alternate, but it will be the mainstream," he remarked. Similarly, the proposed Grameen Credit Score aims to help SHG members and rural borrowers enter the formal financial system. Despite this progress, he struck a note of caution: "We must remain cognizant of the need for addressing issues around data accuracy, data security, and model risk." Responsible innovation, he said, must uphold the core values of integrity, transparency and public service. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
