How CIBIL goofs up credit records, resulting in denial of loan

A consumer was denied home loan because CIBIL mixed up his credit history or record with someone else. Another was denied a loan due to gender mismatch. This could happen to you as well

Moneylife and Moneylife Foundation have been continuously raising question on the quality of credit reports and data in India. Here is a shocking case of Umesh Dhawan, who was denied a home loan of Rs5 lakh because his credit history or record data was mixed up with someone else, who was a defaulter. Mr Dhawan has been wrongly blaming ICICI Bank for the problem, while Credit Information Bureau (India) (CIBIL) was at fault.


CIBIL, the credit bureau while accepting its mistake in merging the credit record of Mr Dhawan with another person, has issued an apology and sent a fresh credit report to him, after a mail from Moneylife and strong intervention by ICICI Bank to which we forwarded the customer’s complaint. Even then, CIBIL provided ICICI Bank with an apology meant for the customer and not directly to Mr Dhawan. An explanation was forthcoming only when Moneylife wrote to CIBIL.


While Mr Dhawan’s record would be cleared, there may be several such cases where a person's credit record or data is mixed up with someone else. In a similar case, a senior financial consultant, DM Mahalaxmi also had to go through the same trauma. The question therefore is who will compensate for the loss of repute and trauma experienced by Mr Dhawan and Ms Mahalaxmi.


“Credit information submitted to CIBIL pertained to Umesh Uhawan who had taken a joint loan with Rahul Biswas. Since information pertaining to Umesh Uhawan and Umesh Dhawan were similar, the system matched the details pertaining to Umesh Uhawan with Umesh Dhawan,” CIBIL said in an email to Moneylife.


However, this raises bigger question on the credibility of credit bureaus, their data and ability to crunch the data. Matching data fields like name, date of birth, address, telephone numbers and identifiers like PAN, passport number and voter ID card is a challenge, especially in a country like India. However, over the years credit bureaus like CIBIL have developed an algorithm that is supposed to consider several fields before making a match.


When information in relation to a person whose credit information report (CIR) is to be obtained is fed into the system, a best possible CIR is generated based on the match rules with the available data. When sufficient data elements between two sets of personal data overlap, the information of two different accounts are merged in the CIR, CIBIL said.


In the case of Mr Dhawan, CIBIL said, “Based on the dispute raised by the consumer, we had done an in-depth analysis, it was observed based on the data submitted to us and our match riles, the CIR generated for the consumer had details of another individual mixed in the consumer’s report. We have immediately taken corrective action to separate the information.”


This is a verbatim of the reply received by Ms Mahalaxmi from CIBIL. There may be several such cases, but the credit bureau has refused to divulge the numbers. It said, "The rate at which incorrect merges occur at CIBIL is very low, and is competitive with bureaus of similar size and maturity globally.” Strangely, CIBIL is not answerable to the public as it continues to have a near monopoly on customer credit data or records.


CIBIL is also silent on the exact number of fields that are matched before deciding to merge data of two persons and creating a single CIR. “When enough data elements between two sets of personal data overlap, the information for the two subjects is merged together. The rules, which decide when enough data has overlapped to trigger a merge have evolved over the lifetime of CIBIL, based on annual analysis of the overall consumer dataset. In order to present the consolidated credit history of a person in a credit information report there are a few sets of match rules. The CIR is generated only when such rules are satisfied,” it said.


In the case of Mr Dhawan, were the fields like date of birth, address, PAN number, matched? Looks unlikely. This also means there is something wrong in the process itself.


Moneylife has been raising the issue of credit tracking system, which the above mentioned incidents show, is still in a mess and crippling financial life for no fault of the consumer.


According to sources, following the letter from Moneylife Foundation to Reserve Bank of India (RBI) governor D Subbarao on 13 December 2012, there has been quite some progress on the issues. The RBI has also set up a task force address some of the data parity problems between credit bureaus and lenders, the sources said.


Earlier, following the complaint letter, the RBI has asked banks and financial institutions (FIs) to share historical data with new credit bureaus, of which they had become members.


The financial literacy initiative of Moneylife Foundation, has led to the discovery that credit-tracking remains faulty in several ways. The Foundation also discovered that licensing of four credit bureaus without a level playing field, in terms of access to credit information and historical data, has created a system that is not functioning as it was supposed to.


Moneylife Foundation, through a day-long workshop and counselling on credit reports and issues and through few case studies, also discovered that most of the lenders only look at CIBIL data while others do not even bother to look at a credit report at all before making lending decisions.


There has been much discussion over the accuracy of the data in consumer reports. In general, industry participants maintain that the data in credit reports is very accurate. The credit bureaus point to their own study of 52 million credit reports to highlight that the data in reports is very accurate. The Consumer Data Industry Association testified before the US Congress that less than 2% of those reports that resulted in a consumer dispute had data deleted because it was in error. Nonetheless, there is widespread concern that information in credit reports is prone to error. Thus, the Congress has enacted a series of laws aimed to resolve both the errors and the perception of errors.


However, the goof up in the above mentioned two examples of Mr Dhawan and Ms Mahalaxmi, clearly highlights the need for audits and scrutiny of credit bureaus as well.


NOTE: If you are facing similar issue, you may want to get help from Moneylife Foundation's free Credit Helpline



Kumar Sambhav

1 month ago

I think CIBIL is enjoying monopoly and other it should be made mandatory to banks to look at other credit agencies and look for average.


Sucheta Dalal

In Reply to Kumar Sambhav 1 month ago

suggest you attend our financial literacy seminar this week. Register for our newsletters. There are 4 credit bureaus in India. You must understand how it works. Moneylife Foundation also offers FREE guidance on credit issues. It is a pity that NOBODY wants to use it and understand issues -- in general , or their own case!

Amit Sharma

3 months ago

Hi, great article. I read recently that cibil identity theft has become common these days. This scares me a lot, is there a way to avoid them?

Ravindra Hulsure

4 months ago

Hi , i had settlement of my crdit card in 2007 of ABN AMRO bank,hsbcbank & detushce also detusche bank convert in Indusind bank may in 2007 i already settled with detusche bank after that again same settled with indusind bank,that reflected in my cibil report pl. request you to my cibil report at liberty to withdraw, pl. give us contact number and contact person name

Ravindra Hulsure

4 months ago

Hi , i had settlement of my crdit card in 2007 of ABN AMRO bank,hsbcbank & detushce also detusche bank convert in Indusind bank may in 2007 i already settled with detusche bank after that again same settled with indusind bank,that reflected in my cibil report pl. request you to my cibil report at liberty to withdraw, pl. give us contact number and contact person name


1 year ago

Hi friends if you want to improved your cibil score or if you have any issues about your cibil score then call to prisha 7208205581, She is a expert from Credit 4 Loan who helped me too improve my score very well or visit them at


2 years ago

I have been a victim of CIBIL, standard chartered and shaha finlease. i had closed my loans way back in 2001 but scb showed an overdue 0f 1.99 lac & shaha finlease showed 17.8 lac for the same account. finally i closed the account with shaha for 37k out of which 12k went to credit sudhar.i dont know what to do inspite of clearing it my score has not been updated. common people like me are suffering bcoz of these people and Rs. 1.14 Lakh Crore Of Bad Debts Written Off Using Public Money statement was given by these banks.v r small people & v need small loans which v pay promptly but still v r the ones whop r suffering whereas big people can take big loan and live happily

Suresh Naik

3 years ago

On receiving CIBIL report shocked to see so my entries in my name

Date of Birth mentioned in the report as “11-02-1965” whereas my date of birth is “17-03-1967”.

1 Out of 33 loan accounts listed in CIBIL report , after Cross checking with 11 banks to get this verified, only 8 belongs to me and which don't have any outstanding , remaining all the accounts belongs to P. Satyanarayana of Hyderabad which has large outstanding and written off entries.

Don't understand on why the entries of other customer is appearing against my name who is no way related to me.What kind of IT systems are used by CIBIL. can we highlight this case of RBI

Suresh S Naik



In Reply to Suresh Naik 2 years ago

Hello Suresh,

I am also in similar situation when i received my CIBIL report as you had. did you get any resolution on the disputed account.
Please provide me you contact email so i could get some suggestions on this.


In Reply to Suresh Naik 3 years ago

Thanks for your comment Mr Naik.
We suggest you to immediately send your query to Moneylife Foundation's Free Credit Helpline so that our experts can advise you properly.


3 years ago

Last year I too faced a similar situation wherein I was made to run between ICICI Bank and CIBIL.
I discovered that CIBIL can commit a crime and get away Scot free for it as rightly pointed out by you they are not accountable to anybody!!
I fail to understand why RBI cannot intervene and make them accountable for the serious lapses made by them.
My query to them has remained unanswered :
How is a OD account against securities a liability ? How and when does the same become a default if you are meeting the regular interest payments ? I am still seeking answers, both the financial institutes never bothered to reply. Complaining to the banking ombudsman also drew a blank. Hope the RBI governor takes up this very serious issue or will they address it only when a cabinet minister falls victim to a defective CIBIL report?

Tapas Bhaduri

3 years ago

Quality of CIBIL report in INDIA is very bad.False or wrong credit score from CIBIL destroying hopes of common people in many cases.Banks and other financial institutions should avoid these wrong reports to help common people.

Ashish Mishra

3 years ago

I recently found that my CIBIL report contains 9 credit accounts of which I actually own only one.

Due to bad 9 accounts, my request for car loan has been denied by two banks.

I am not whether this is also one of the data merge issues. Also if moneylife could help me resolve this.

Amit Kothari

3 years ago

I remember since the year 2007 by gods grace I have not contacted any banks for any kinds of loan still i see 8 enquirers starting from some HARI INVESTMENTS to RANK (Are they even financial insitutes?) mounting for 72 lakhs!!!! If these guys are getting paid salaries then this is the worst phase of humanity!!!!!

Amit Kothari

3 years ago

I happened to check my cibil report today and see that in the year 2006 Standard Chartered bank has an enquiry for an auto loan in my account for 5.25 crores! Are you serious! I am an ordinary salaried guy and it seems like 56923610 (exact loan amount) is my old office landline number. What a joke!


Sucheta Dalal

In Reply to Amit Kothari 3 years ago

Please do not take this lightly. If you account is compromised with wrong information, get it rectified. write to CIBIL, demand details and get it corrected. Challenge them about the source.

It could mean that y our account has been mixed up with another person of the same name. God forbid if that person defaults! best

Manoj Kumar

In Reply to Sucheta Dalal 3 years ago

Dear Ma'am,

My record has also been mixed up with some other person with same name. I got the shocker when i applied for the home loan. This person has already sanctioned loan amounting to 17 lakhs. I have already deposited 10 lacs to builder and now i am being denied for the loan. I have raised the dispute with CIBIL on 31st October 2014 and still there is no word from them. They just say they are in process of getting the confirmation from banks.
I am very much tensed and don't know what to do as there is no one who could help me out.

Please guide.
Manoj Kumar

Rakesh Choudhary

In Reply to Sucheta Dalal 3 years ago

When all the banks refused me Credit Card without assigning any reason, a banker friend suggested me to check my CIBIL score.
It was completely goofed up. It took me 5 rounds of corrections and pointing out even clerical mistakes (like DOB, in last round), that I finally have a clean score.
Only God knows their algorithm and data source. I had some bike loan, some loan from individual, some credit cards all reported and captured by CIBIL, which in my real life never existed.
Lot of transparency is required in their functioning.

santosh pathak

3 years ago

wrong information

A Srinivas Rao

4 years ago

My Self Srinivas from Hyderabad. Last week when i applied to Axis Bank for personal loan, they rejected my loan application saying that i have defaulted loan & the CIBIL score is low. When i purchased the CIBIL & saw the account loan account number is not at all related to me. Only name is matching. With the same loan account number it was happened to me 2011 also. That time also i have put lot of efforts to prove my innocence. That time Indian Bank & CIBIL issued communication that the loan is not belongs to me. Now with the same loan account number the data is added to my CIBIL data in Nov'13.
I don't know in what parameters CIBIL is deciding common man data.
The severely damaged my credit history.
Please help me how to tackle these people.
I have already spoke with Indian Bank people as well as CIBIL. Yesterday i got a letter from Indian Bank branch where the loan is defaulted that the loan is not belongs to me. I have already wrote a mail to nodal officer of Indian bank with a copy marked to Chairman of Indian Bank & CIBIL with attachment of the letter issued by Indian Bank


Vishrut Patel

In Reply to A Srinivas Rao 4 years ago

You can solve this issue by concerning your bank as, CIBIL does not make any changes directly to your Credit Information Report (CIR). Only once the change is authorized and provided by the concerned Bank or financial institute, then CIBIL update your CIR. You already got letter from Indian Bank regarding the loan which defaulted is not belongs to you, you can visit your bank and ask them further to update your credit record with CIBIL. All you need to do is, to fill-in details in ON-LINE DISPUTE FORM ( and submit your dispute to CIBIL. You can access more information on the Dispute Resolution Process on CIBIL site :

Ajith Kumar M

4 years ago

First & fore most cibil code should be available free. Then a individual will definitely try to correct himself.

ASCI to suspend ads pending investigation

The initiative from ASCI will go a long way in getting seriously offending ads removed immediately before they cause any damage to the consumers and society in general

Advertisements which breach the ASCI (Advertising Standards Council of India) code either by being grave obscene, indecent, vulgar or which are against public interest will now have to be withdrawn immediately pending decision of its Consumer Complaint Council (CCC). ASCI has recently amended its Articles of Association to provide for Suspension Pending Investigation. This is similar to the codes of some of the other SROs like the Advertising Standards Authority of the UK. The new Article on Suspension pending Investigation states as follows: 


“In exceptional circumstances, when it appears prima facie that an advertisement is in serious breach of the Code and it’s continued transmission on/ through/ by any medium causes or has the effect of causing public harm and/or injury or its continuation is against public interest, then ASCI would, pending investigation and decision by CCC, forthwith require the advertiser/ the advertising agency/ the media buying agency and the media concerned to immediately suspend the release of advertisement.


In the event of suspension of any advertisement in the manner, the CCC shall at the earliest and not later than 30 days from the date of the suspension, adjudicate whether or not the advertisement is in breach of the Code and pass appropriate order accordingly after giving a reasonable opportunity to hear to the advertiser whose advertisement has been suspended. This decision of the suspension is to be taken by the chairman (or, in his absence, the vice-chairman) of ASCI, in consultation with two members of the CCC.”


Commenting on this initiative Arvind Sharma, ASCI chairman said, “Suspension Pending Investigation is an important landmark for ASCI. It will ensure immediate action against advertisements that are clearly seen as against public interest. This initiative will go a long way in getting seriously offending ads removed immediately before they cause any damage to the consumers and society in general. We expect the advertising sector consisting of advertisers, ad agencies and media to support this very important initiative wholeheartedly to protect the interests of Indian consumers and general public.”


 Advertising Standards Council of India (ASCI) is an industry body set up to voluntarily self-regulate advertising content. ASCI & its Consumer Complaints Council (CCC) deal with complaints received from consumers, industry and NAMS, against advertisements which are considered as false, misleading, indecent, illegal, leading to unsafe practices, or unfair to competition, and are consequently in contravention of the ASCI Code and Guidelines for Self-Regulation in Advertising. ASCI has recently taken other initiatives to speed up its decision making process.


ASCI has also introduced the Fast Track Complaint Redressal process which will provide decisions related to the intra industry complaints within seven days.


New Banking licenses: Confusions galore in RBI’s clarifications

From what appears from the media, the most significant interest in the new banking licenses has come from existing leading NBFCs. How would these companies convert themselves into banks?

With all humility being harnessed, one cannot call it ‘clarifications’. In fact, the whole scenario surrounding the new banking licenses has become a lot more confused, with the 165-page document euphemistically called ‘clarifications’.

For the starter, one does not have be to be impressed by the massive amount of writing that the Reserve Bank of India (RBI) might have had to do to produce the 165-pager, since the document contains questions too—questions that users may have posed to the RBI. And there are 422 questions!  And in addition, there are several answers which are repetitive.

Existing NBFCs converting into banks:

One of the most vexed questions is what would be the mode of conversion of existing NBFCs into banks. From what appears from the media, the most significant interest in the new banking licenses has come from existing leading NBFCs.  How would these companies convert themselves into banks?

It is notable that the ownership structure of banks in India would envisage substantial holding in the banking company being with another entity, a holding company, called Non-Operating Financial Holding Company (NOFHoC). The NOFHoC, in turn, must also have at least 51% of its shares held by companies, in which the ‘public’ (read non-promoter) holding is not less than 51%.

Most of the NBFCs proposing to convert themselves into banks are listed companies. If these companies were to convert themselves into banks, the issue is—what do the shareholders of these companies get? It is evident that the banking company itself cannot be held by the public, since a banking company has to be mandatorily held by the NOFHoC. Therefore, the most plausible solution seemed to be to transfer the business of the NBFC to a banking company, and hold the shares of the banking company into the erstwhile NBFC.

However, the RBI’s suggested structure, coming from Q 71 of the Clarifications, seems to be that the listed NBFC will hold shares of the NOFHoC, which, in turn, will hold the bank. This multi-tier structure creates a huge tax drain, thereby causing a loss of shareholder value. Let us not forget that India has double tax on corporate dividends, in form of distribution tax. Therefore, as we are proliferating entities, we keep increasing the tax drain.

The structure envisaged by the RBI comes in the diagram.

One must realize that this leads to two layers of dividend distribution tax, besides one layer of corporate tax. One would argue that it is possible to eliminate one layer of dividend distribution tax taking advantage of the provisions of Section 115-O (1A); however, one needs to then structure NOFHoC as the subsidiary of the NBFC.

Ideally, it would be better for the NBFC to opt for a court-approved scheme of restructuring and offer the shares of NOFHoC to the shareholders of the NBFC by way of a swap. However, the insistence of the RBI that the shares of NOFHoC should be owned by the promoter group creates a problem. In answer to Q 78, etc, the RBI seems to be permitting a listed company being a shareholder of NOFHoC.  The RBI also is clearly opposed to the idea of the listed company itself being the NOFHoC (see Q 79-b).  Further, Q 96 clearly rejects the swap of shares model. Thereby, there has necessarily to be a layer of shareholding between the NOFHoC and the shareholders of the NBFC, which will create the tax drain referred to above.

Loss of regulatory arbitrage:

One possible limitation that anyone nurturing a banking dream needs to consider is that the banking group (meaning all financial entities under the NOFHoC group) will not be eligible to carry any unregulated activities. Currently, NBFCs have absolute liberty to carry financial activities as well as non-financial activities. For example, an NBFC may even carry trading in properties, or trading in commodities, or any other activity for that matter. The only thing that NBFCs need to ensure is that their income from such non-financial activities stays limited to 50%, thereby ensuring that the principal business is financial activity.

However, once the financial group (that is, the banking company and other financial activities which necessarily have to come under the NOFHoC umbrella) has a banking company in terms of the RBI guidelines, surely enough, the banking company can only carry such activities which are regarded as para-banking activities by the RBI. The examples of these are given in Q 86. For other regulated financial activities, the group has the liberty of carrying them under other entities within the NOFHoC umbrella. But then, can any of the entities under the NOFHoC umbrella carry non-financial activities? For example, trading, or consulting? Surely, there is a restriction against a bank carrying non-banking activity under the Banking Regulation Act, but surely, there is should not be any such restriction in case of other financial entities under the NOFHoC umbrella.

However, the mood of the RBI seems to be that entities under the NOFHoC umbrella cannot engage in any non-financial activities. Answer to Q 47 seems to be putting a complete bar on “unregulated financial activities” being carried by any entity under the NOFHoC. There is, therefore, an obvious bar on any unregulated activity, clearly ruling out any non-financial activity.

Operating leasing is regarded as a non-financial activity. Hence, the RBI’s clarification may rule out operating lease business being carried out by any entity under the NOFHoC umbrella.

Not only unregulated financial activities and non-financial activities, there will also be restriction on carrying activities such as housing finance, as a separate entity. The guidelines require that all lending activities must come under the banking company. Several NBFCs currently also have housing finance companies. There is, arguably, a regulatory arbitrage that exists in keeping housing finance under a housing finance company umbrella, rather than under the bank. In Q 102, the RBI has clearly ruled out any housing finance company under the NOFHoC umbrella. This is repeated in questions 109-113 as well. So, once a financial group decides to set up a bank, it has to merge the housing finance company with the bank.

There are considerable restrictions on lending by banks—for examples, banks are generally not allowed to lend against promoter shareholdings. Most NBFCs do so. Once a banking group comes into existence, all lending transactions necessarily come under the bank, and hence, the restriction applies.

In essence, several avenues for regulatory arbitrage that exist currently will go away once a group decides to set up a bank.

Ekla chalo re…

Very strangely, the RBI seems to have taken a view that more than one promoter cannot come together to form a NOFHoC. Q 116 (also Q 142-3) blanketly discards the idea of more than one promoter coming together to have control over a NOFHoC. This, by itself, seems quite self-contradicting, as there is a limit of 10% on the holding of an individual along with his relatives. There is also a minimum 51% holding required by companies which have majority ‘public’ interest. If that is so, the answer to Q 116, saying only one promoter must hold the NOFHoC, is completely non-reconciling. In answers to several questions, the RBI has stated that even a listed company can hold the NOFHoC. Is it not strange that a listed company, purportedly having wide-spread ownership interest, can own a NOFHoC, but when it comes a promoter, not more than one promoter can own a NOFHoC? In fact, the whole idea of a single promoter for a NOFHoC is completely self-contradicting and unreasonable.

In several bank-promoter groups, there will be strategic investors, joint-venturers, groups of promoters or associates joining together to put up equity in the NOFHoC. The stipulation of a single promoter will only lead to creation of one more layer at the shareholding level of the NOFHoC. That is, if two or more promoters of strategic investors want to come together to own a NOFHoC, they will together have to form a shareholding company (a CIC), which in turn will own the NOFHoC. The entire ownership structure arising as a result of the RBI guidelines will lead to proliferation of entities, thereby making the ownership structure of banking companies highly opaque.


In the 400+ list of questions, most questions came on the holding structure of the NOFHoC. The holding structure as envisaged by the RBI is either not clear, or, if it is clear, it is not practical, at least in the Indian context.

(Vinod Kothari is a chartered accountant, trainer and author. He is an expert in such specialised areas of finance as securitisation, asset-based finance, credit derivatives, accounting for derivatives and financial instruments and microfinance.)



Dayananda Kamath k

4 years ago

the govt is pushing for new banks because old banks have exhausted their resources and can not give more loans now. and may close shop shortly if the customers start to enforce their rights properly. hence they want some new banks so that they can also be abused to the hilt. and get browny points for reforms in the election year. it is high time people of this country realize the game plan. all reforms so far done are to sell the country to fiis and foreigners.

R Balakrishnan

4 years ago

Well put, Vinod. When the regulator does not like something his master commands him to do, he ensures enough obfuscation. As it is, with RBI, obfuscation does not even need an effort.
Someone is pushing and someone is holding back. What will give, let us see.

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