Give borrower info until loan cycle or shutdown: RBI to credit institutions

In these cases, the repayment history of these entities' borrowers is not updated, even if they continue to repay or clear their dues

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The Reserve Bank of India (RBI) on Thursday asked credit institutions (CIs) to give credit information of the borrowers onboarded by them to the credit information companies (CICs) before their licence cancellation, shut down of operations or till the completion of the borrower’s loan cycle, whichever is earlier.

Currently, entities whose licence or Certificate of Registration (CoR) has been cancelled by the RBI are not considered as CIs under Credit Information Companies (Regulation) Act, 2005 (CICRA) and their credit information cannot be accepted by the CICs.

In these cases, repayment history of the borrowers of these entities is not updated even if they continue to repay or clear their dues.

In order to redress difficulties faced by these borrowers, RBI has directed CICs and CIs to implement a credit information reporting mechanism subsequent to the cancellation of the licence of banks or Non-Banking Finance Companies (NBFCs).

In its circular, RBI said, “These CIs shall continue to report credit information of the borrowers onboarded and reported to CICs prior to cancellation of their licence or CoR to all the four CICs till the loan lifecycle is completed or the credit institution is wound up, whichever is earlier.”

Further, CICs will term entities as “Licence Cancelled Entities” in their Credit Information Report (CIR). CICs shall base this tagging on the information available on the website of the RBI or the cancellation of licence order received from the banking regulator.

The circular will be implemented within six months of the date of its issuance, with the provisions being applicable on those entities whose licence have been cancelled by RBI before the issuance of this circular.