India’s central bank on Thursday asked asset reconstruction companies to establish a standard operating procedure for providing information to credit bureaus, in a bid to harmonize loan data submission standards for asset reconstruction companies. assets with those that govern financial institutions.
In its circular, the RBI emphasizes that asset reconstruction companies, which buy out and resolve bad debts of financial institutions, give “top priority” to resolution of customer grievances as well as submission and timely updating of loan data.
The Reserve Bank of India has publicly asked supervised entities to ensure compliance with standards and protection of consumer interests.
Records provided to credit reporting agencies should be updated regularly and no repayment cases should be missed, the RBI said.
These guidelines will harmonize the rules applicable to credit reporting agencies in respect of credit bureaus with those applicable to banks and non-banking institutions, the RBI added.
Credit reporting agencies compile credit scores and reports based on individuals’ borrowing history, payment behavior, and borrowing habits.
Banks and non-bank financial companies share data with credit bureaus to prevent defaults, facilitate responsible lending decisions, and track borrowers’ credit histories.
TransUnion CIBIL, Experian, Equifax and CRIF High Mark are four such entities that operate under central bank guidelines.
ARCs must now become members of all credit bureaus, the RBI said, adding that they must appoint an officer to deal with the credit bureaus. Previously, they had to be members of at least one credit bureau.
ARCs must put in place systems and processes to ensure compliance with these guidelines by January 1, the RBI said.
