 "Reserve Bank of India Governor Raghuram Rajan during an interactive session organised by Assocham in Bengaluru")
The Credit Information Bureau of India (CIBIL) has decided to provide individuals with one free credit report a year, the Reserve Bank of India chief Raghuram Rajan said.
“Going forward, by the end of the year, the Credit Information Bureau of India will start providing individuals with one free credit report a year, so that they can check their credit rating and petition if they see possible discrepancies,” Rajan said.
Currently, an individual has to shell out Rs 550 for a report and a onetime credit score in the PDF format from CIBIL.
Most Indians are unaware of their credit score and have never bothered to check their credit report either. Consequently, they may not know that there may or may not be issues present in their report.
Financial institutions, including banks, check the credit worthiness of an individual before extending credit or loan, through these credit reports. “When an individual knows that a default will spoil their credit rating and cut off future access to credit, they have strong incentives to make timely payments,” Raghuram Rajan said at a seminar on 'Transforming Rural India through Financial Inclusion'.
Other than CIBIL, there are three other credit bureaus in India — Experian, Equifax and CRIF High Mark. But at the moment, the governor has only talked about CIBIL providing a free report.
Praising the credit bureaus further, Rajan also said: “Credit information bureaus have helped tremendously in solving both the information and incentive problem in retail credit.”
Rajan also pitched for the need to expand the reach of credit bureaus in rural India, even bringing borrowing under Self Help Groups (SHG) into their ambit.
Rajan's three-year term ends on September 4.
