If at any point your request for a loan is rejected by any PSU or a private bank on account of bad credit history, you can still avail credit through your neighbourhood cooperative bank.
This is because the RBI has omitted co-operative banks in the regulation that requires banks to report delinquent cases to the credit bureau.
As per the RBI guideline, it is mandatory for banks to be a member of at least one credit bureau. At present, Credit Information Bureau of India Ltd (CIBIL) is the only credit bureau operational in India. CIBIL is promoted by the State Bank of India (SBI), Housing Development Finance Corporation Limited (HDFC), Dun & Bradstreet Information Services India Private Limited and Trans Union International.
Three more credit bureaus including Experian, High Mark and Equifax are expected to start their operations in India in the next four to six months from now. “A final go-ahead from the RBI is awaited,” said Siddharth Das, executive vice president, High Mark Credit Information Services Private Ltd.
With a view to bolster financial stability of the PSU and private banks and arrest the delinquency rate, the RBI had issued a regulatory framework by allowing banks to access information on the potential borrowers and their creditworthiness from credit bureaus.
Surprisingly, the credit guidelines the RBI has issued to the banks do not include urban and rural cooperative banks in India.
Cooperative banks have turned out to be hot picks for people whose request for loans has been rejected by PSU or private banks, on account of bad credit history.
Several cooperative banks including The Saraswat Cooperative Bank, The Shamrao Vithal Co-operative Bank, Abhyudaya Co-operative Bank, etc, have suddenly become fiefdoms for people with bad credit histories. Apart from this, credit societies have suddenly found high net-worth customers approaching them for loans.
“This is an area where the RBI needs to look into,” said Das.
“The role of a credit bureau is to pull together borrowing and paying habits of individual customers from different banks across the country. We are here to help the lenders assess credit-worthiness of an individual and their ability to pay back a loan,” he added.
“Our role is not to reject loan request of any individual. Our role is to collate credit information contributed by our members (banks) and help them in making credit decisions. The credit information includes details of loans and credit cards of every individual. Lastly, it is the prerogative of a bank to refuse or sanction loan and not the credit bureau,” said Das.
—Vidyut Kumar Ta [email protected]