RBI asks asset reconstruction firms to standardise credit bureau reporting

India's central bank on Thursday directed asset reconstruction companies to establish a standard operating procedure for providing information to credit bureaus, in a move to harmonise 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 - give "top priority" to customer grievance redressal as well as timely submission and updation of loan data.

The Reserve Bank of India 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 entities that operate under the central bank's guidelines.

ARCs shall now become members of all credit bureaus, the RBI said, adding that they had to appoint a nodal officer for dealing with the credit bureaus. They were earlier required to be a member of at least one credit bureau.

ARCs should put in place systems and processes to ensure compliance with these guidelines latest by January 1, the RBI said.