Reserve Bank of India (RBI) made few recommendations to the credit information companies which will be advantageous to individual customers, corporates and financial service industry, as well.
The RBI insisted on the following:
- There needs to be a little more transparency from consumer-centric points so that the process becomes easier for the consumer.
- RBI also insisted that there needs to be more usage and uniformity for the credit information bureaus.
- Lastly, the bureaus have to bring in some uniformity in the way they are approaching the marketplace.
After these recommendations were released in March, the committee also recommended standard classification of credit score and common data formats of credit scores so that they are easy to understand and comprehend. These steps will bring in more uniformity in the area of credit scores and rectification.
Apart from this, since the credit information companies are around since about three-and-a-half years, the RBI is scrutinizing original regulations and comparing the same with the progress that has been made by these firms. After comparing both, RBI is taking effective steps fill in loopholes and come up with more authentic and strong structure that regulates these rectification companies.
Credit information companies have a wider scope that what they are covering today. With a broader perspective, they can do a lot more than what they are currently doing.
CIR should be the only base depending on which loans should be given to the applicants. To achieve this, the RBI suggested that Credit Information Companies (CIC) should hold workshops on a regular basis for banks/FIs, in association with Micro Finance Institutions Network (MFIN) or IBA depending on the requirement.
Apart from all this, RBI wishes to streamline all the data that is submitted by the banks and other financial institutions to CIC’s. Hence, it has come up with a standard format and banks are obliged to submit the data in the same given format so that there is a standard format for data entry and maintaining the same.
RBI also understands the fact that general public does not understand the concept of credit score very clearly. To simplify the same, it suggested that all the format should be in the range of 300 to 900 which is adapted by CIBIL. This will ensure a common format which becomes easy to understand and comprehend.
RBI has given detailed and clear formats for data submission, and maintenance so that people do not face any problem in the near future. However, there is a need to bring in more attention about credit score, its effects, and impacts of the same on the lives of people.
With a little hard effort from the sides of the bank and rectification companies, people will understand the importance of maintaining an excellent score. Browse the net for more information on the same.