Mudra Compass

Are you sick of waiting for credit reporting companies to fix mistakes in your credit report? Soon, you will be able to file a claim for reimbursement for any delays in updating your records.

The Reserve Bank of India recently announced measures to improve the grievance redressal mechanism of credit information companies.

“With the increase in customer complaints regarding credit information reporting and the functioning of credit information companies (CICs), it has been decided to put in place a comprehensive framework for strengthening and improving the efficacy of the grievance redress mechanism and customer service provided by the credit institutions (CIs) and CICs,” the RBI said in its statement of developmental and regulatory policies.

A compensation system for the delayed updating and repair of credit information reports is one of them. Every time a credit report is checked, borrowers will also get SMS or email alerts. The time during which data obtained from lenders will be included in their databases must now be specified by the credit reporting bureaus.

They must disclose any customer complaints they have received. They must now detail the quantity and kind of client complaints that they have received via their websites. The banking regulator stated that the comprehensive rules would be released later.

Earlier, credit information companies were included in the Reserve Bank-Integrated Ombudsman scheme.

Based on information obtained from lenders, credit information businesses assemble repayment histories and determine a person’s credit score. Banks increasingly heavily weigh credit scores when determining whether to approve or reject loan applications and what interest rates would be paid.

People who have inaccurate credit reports and scores may suffer consequences, such as being denied the necessary home loans or being forced to pay much higher interest rates for no fault of their own.

The RBI announced in August 2022 that customers of CICs would be allowed to use the Reserve Bank-Integrated Ombudsman Scheme to resolve their grievances against CICs for free. This scheme covers regulated entities like different types of banks and non-banking financial companies.

India’s central bank had directed all Credit Information Companies (CICs) to appoint an internal ombudsman at the top of their internal grievance redress mechanism by April 1, 2023. The directions include the appointment/tenure, role and responsibilities, procedural guidelines, and oversight mechanism for the IO, the Reserve Bank of India said in a statement. All complaints that are partly or wholly rejected by CICs will be reviewed by the IO before the final decision of the CIC is conveyed to the complainant, it said, adding that the IO will not entertain any complaints directly from the members of the public.

By April 1st, 2023, all Credit Information Companies (CICs) must select an internal ombudsman to serve as the head of their internal grievance redress mechanism, according to a directive from the central bank of India. The Reserve Bank of India said in a statement that the instructions cover the IO’s appointment/tenure, function and responsibilities, procedural norms, and supervision system. The IO will assess any complaints that CICs partially or completely reject before communicating their final judgment to the complainant, it was stated, adding that the IO will not take complaints directly from the general public.

When it came to the topic of credit history rectification, borrowers have so far been on the receiving end. When they addressed the credit bureau, they were advised to contact banks, but frequently, banks were found to be slow to update and rectify the information. With the new policy change, this will alter.

The RBI said that by allowing an impartial top-level authority within the CIC to assess customer complaints before they are dismissed, these directives will enhance the internal grievance resolution mechanism within the CICs.

To make the Reserve Bank-Integrated Ombudsman Scheme (RB-IOS) 2021 more broad-based, the central bank had decided to bring CICs also under the ambit of the scheme.

The RBI had said the move will provide a cost-free alternate redressal mechanism to customers of regulated entities for grievances against CICs. They have issued a circular stating that “Every CIC shall appoint the internal ombudsman for a fixed term of not less than three years, but not exceeding five years.”

It further said complaints related to fraud and misappropriation, except those resulting from a deficiency in service, if any, on the part of the CIC, will not be handled by the IO.

Meanwhile, it has also revealed plans to establish a centralized portal to facilitate access to information regarding unclaimed deposits by depositors or their beneficiaries across various banks.

It has been decided to develop a web portal to enable search across multiple banks for possible unclaimed deposits, RBI Governor Shaktikanta Das said while announcing the first bi-monthly monetary policy for the current financial year 2023-24.