Credit Sudhaar, a non-specified user entity, is accessing confidential credit records from CIBIL while claiming to help individuals improve and maintain their credit health. Why is the financial regulator, RBI, silent?
Credit Sudhaar, a firm set up by former bankers Gaurav Wadhwani and Arun Ramamurthy, says it has a tie-up with CIBIL for offering credit advisory services and will help individuals in improving their credit health which will in turn enable customers to get better offers from lenders at the CIBIL Market Place. What it does not say is it is neither registered with the Reserve Bank of India (RBI) as a non-banking finance company (NBFC) nor it is a specified user entity of CIBIL but will access credit records of crores of individuals.
While there is no word from CIBIL on this strange partnership, what is surprising is how the credit bureau may have allowed a non-specified user entity to access its database. In a press release, Credit Sudhaar said it is associated with Dipran Finance Pvt Ltd. However, on its website it mentions affiliation with Safe Capital, an NBFC. In an email reply, the firm said, “Credit Sudhaar is associated with both Safe Capital and Dipran. Both Safe Capital and Dipran are members of CIBIL”.
Even on its website under the FAQ section, replying to a question “Are you approved by the RBI?” it says “Yes. We are affiliated with Safe Capital which is an approved institution as per RBI charter”.
Earlier, Credit Sudhaar used to mention itself as an NBFC registered with the RBI, which was changed later.
This also means, Credit Sudhaar may be using either Safe Capital or Dipran’s login credentials to access the CIBIL database, especially the portfolio review which gives complete details of an individual. Since Credit Sudhaar is not a specified member entity of CIBIL, this violates Section 22 of the Credit Information Companies (Regulation) Act, 2005 (CIRCA), which says...
22. Unauthorised access to credit information.—
(1) No person shall have access to credit information in the possession or control of a credit information company or a credit institution or a specified user unless the access is authorised by this Act or any other law for the time being in force or directed to do so by any court or tribunal and any such access to credit information without such authorisation or direction shall be considered as an unauthorised access to credit information.
In addition, the CIRCA clearly defines a specified user who can register with a credit bureau as member entity. Section 2 (l) states “specified user” means any credit institution, credit information company being a member under sub-section (3) of Section 15, and includes such other person or institution as may be specified by regulations made, from time to time, by the RBI for the purpose of obtaining credit information from a credit information company.
Besides credit institutions, insurance companies, telephone services providers, credit rating agencies registered with Securities and Exchange Board of India (SEBI), a stock broker or sub-broker registered with SEBI, a trading member of recognised commodity exchange, SEBI and Insurance Regulatory and Development Authority (IRDA) are regarded as specified users under Regulation 3 of the CIRCA.
Let’s put it in simple words. Credit Sudhaar is just a specific services provider. CIBIL is allowing credit institutions and others to sell their loan products or other services on its Market Place. Credit Sudhaar is only registered on Market Place to offer “credit advisory” service for which the charges are Rs10,000 (it is mentioned as processing fees).
Both Mr Wadhwani and Mr Ramamurthy, the promoters of Credit Sudhaar had worked with Standard Chartered Bank and Citi. Both were also directors of SHAHA Finlease Pvt Ltd, an NBFC formed to buy bad assets from StanChart. On several occasions, the RBI, StanChart and the banking ombudsman had reprimanded SHAHA Finlease for its unprofessional conduct and unruly collection agents. Even on the Internet, there are number of complaints against SHAHA Finlease.
Our mails to CIBIL and the RBI remained unanswered till writing the story. We would incorporate their replies as and when we receive it.
NOTE: If you are facing similar issue, you may want to get help from Moneylife Foundation's free Credit Helpline http://www.freecredithelp.in/
Bombay High Court has ruled that police are duty-bound to extend assistance to banks or financial institutions when they are acting under the Act to take possession of liquidated properties
Mumbai: In a significant order for the banking sector, Bombay High Court has ruled that police are duty-bound to extend assistance to banks or financial institutions when they are acting under the Maharashtra Cooperative Societies Act to take possession of liquidated properties, reports PTI.
The recent ruling by the division bench of Justices AM Khanvilkar and RD Dhanuka came on a petition which alleged that police did not provide protection to the officers of Kolhapur-based Ravi Cooperative Bank for taking possession of a property.
Petitioner Tulsidas Narsinga Vhatkar had bought the property in an auction conducted by the bank. According to him, after the auction, the bank requested the Superintendent of Police (SP) to provide protection for the purpose of taking possession from the original owner.
But the SP, relying on a Supreme Court decision, said it would not be possible. The petitioner on the other hand cited Maharashtra Government's circular of January 2008 which directs police authorities to give assistance/protection to the officers of the Cooperative Department.
Agreeing with the petitioner, the judges held: "If Respondent No 1 (liquidator of the Bank) seeks assistance/ protection to enable him to take steps and perform his statutory duties, we fail to understand as to how the decision of the Apex Court would come in the way of the Superintendent of Police to provide assistance and protection to the Government servant for discharging his statutory duty."
"It is not the case of the bank that forcible possession is being taken over by other than a due process," the bench noted.
If the liquidator intends to proceed to effectuate the auction, which has attained finality, he/she being a government servant, necessary protection must be extended by the local police, the court ruled.
The fact that the present petition was filed by the auction-purchaser does not absolve the police from performing their duty to give protection to a public servant, the judges said.
The tribunal also rejected Loop Telecom's plea to restrain DoT from taking any coercive steps as invocation or encashment of guarantees, in case of its non renewal
New Delhi: The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) has rejected Loop Telecom's application seeking relief against the government's direction of renewal of performance and financial bank guarantees on spectrum in 21 circles, reports PTI.
The telecom tribunal also rejected Loop Telecom's plea to restrain the Department of Telecommunications (DoT) from taking any coercive steps as invocation or encashment of guarantees, in case of its non renewal.
" ...the licensee (Loop) and the licensor (DoT) and the bank guarantees being valid till January 9, 2013 only, I am of the view that Petitioners (Loop) have not made out any case for staying the operations of the impugned letters... or issue of mandatory injunction against the Respondent (DoT) for not taking any coercive action against the Petitioner," TDSAT said.
The DoT had issued letters to Loop in November 2012 in some of the circles asking it to renew the financial bank guarantees and performance bank guarantees. It mentioned that the bank guarantees would be invoked in case of Loop's non-compliance.
Loop Telecom had contended before the tribunal that it has already closed its operations following the 2 February 2012 order of the Supreme Court cancelling its licences.
Hence, there was no need to fulfil any obligations such as renewal of bank guarantees arising from the cancelled licenses, the telecom company said.
However, rejecting the application, the tribunal said as per the license clauses "on termination or expiry of the licence, the bank guarantee shall be released to the licencee only after ensuring clearance of old dues which the licencee is liable to pay to the licensor (DoT).
"In these petitions, the licences have been cancelled by an order of the Supreme Court which can be considered as if the licences are terminated. The validity of the same, it seems, will expire on 14 January 2013," said TDSAT.
Loop's guarantees are expiring on 9 January 2013 and it was not legally bound to renew it, the company had contended.