RBI advises banks, financial institutions to provide data to new credit bureaus
Moneylife Digital Team 28 January 2013

Following a complaint by Moneylife Foundation, the RBI has asked banks, FIs to share historical data with new credit bureaus, of which they had become members

The Reserve Bank of India (RBI) has asked banks and financial institutions (FIs) to provide historical data to new credit information companies. “Banks/FIs, which have become member/members of the new credit information companies (CICs) have been advised to also provide historical data in order to enable the new CICs to validate their software and develop a robust database,” the central bank said in its reply to Moneylife Foundation.

 

This was in response to a complaint filed by Moneylife Foundation to Dr D Subbarao, governor, RBI on 13 December 2012 about the mess in credit bureaus and how it affects savers.

 

The 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 don’t even bother to look at a credit report at all before making lending decisions.

 

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.

 

Read: Credit scores are a big zero

 

Moneylife Foundation’s complaint says, “It is imperative that the mechanism to track credit by the four credit bureaus has to be fair and uniform. At any rate, the hapless saver cannot be made to bear the brunt of it. Nor can s/he be asked to get a score from each credit bureau because lenders are not willing to share data with each of them.”

 

Separately, the RBI also confirmed that one can obtain his/her own credit report from the banks by paying just Rs50. This fact was pointed out by R Gopalkrishnan, former deputy general manager (DGM) in the Customer Services Department at RBI and now a counsellor with Disha Financial Counselling during the day-long workshop and counselling on credit issues.

 

He told us that customers can avoid the whole credit bureau route by asking the lender to provide their credit report for just Rs50 or even for Rs10 under the Right to Information (RTI) Act. This fact was not known to us and even the credit bureaus were unaware about it.

 

In the reply, the RBI has said that in response to a number of complaints from customers, who were unable to get their own credit report from banks, it had already instructed banks to provide a copy of the credit information obtained by them from the CIC to the customer upon receipt of such request. (Here is the RBI circular)

 

Moneylife Foundation submitted that rules pertaining to credit bureaus, in so much as they affect customers and individuals, may be framed in consultation with the customers and at the least, the RBI’s own customer services department, which probably receives customer feedback.

 

Read: Credit Information: Discredited Bureaus

 

Also, based on research and feedback from several seminars, workshops held across the country, Moneylife Foundation requested the RBI to take urgent steps on following points…

 

1. Mandate that all lenders share data with every credit bureau so that there is a level playing field. If not, the RBI must inform customers that only CIBIL has comprehensive data.

2. Mandate that lenders share all past data for all borrowers.

3. Mandate that every kind of borrowing be shared by all lenders to make it comprehensive.

4. Create a system where data goes into a secure pool or FTP server from which it can be equally accessed by all credit bureaus—this is in the interest of fairness to customers.

5. Ensure that an individual should be able to apply to just one credit bureau and be assured that the credit record obtained will be the same with the other three. Better still, the RBI note that allows a borrower to obtain a credit report from the lender by paying Rs50 must be publicised.

6. Ensure that data is cleaned so that borrowing is accurately reflected. Ask banks to correct their data whenever appropriate.

7. Put in place a mechanism to verify that the bureaus are collecting, collating information in a fair manner and have an appropriate mechanism for grievance handling.

 

The RBI, in its reply, said that some of the issues raised by Moneylife Foundation are under its consideration. “We further advice that the other issues raised in the (Foundation’s) letter are being looked into and will be taken up appropriately with CICs and credit institutions for bringing about improvement in the Credit Information System,” the central bank said.

Comments
Natarajan Sasthri
4 years ago
My cibil score is 796 as on Oct 31st 2017. One of my lender hadn't informed the cibil of my loan report, most of my payment are on date and only few are with over due charge paid. If this loan account had been shared with cibil, my credit score would have gone beyond 845. Can I lodge a complaint against the institution to any authority. My loan amount is 5 lakhs, and going to end June 2018. Please help me in this regard.
Rajesh
8 years ago
Many of my accounts closed before 2005 are being reported in my cibil report.
Find below the faq information on cibil website . I have checked the CIC Act by RBI couldn't find any info as said by CIBIL. Can someone point me to the RBI circular on how long the credit info being reported?.


For how long will the details of the account reflect in my credit report?

As per the Credit Information Companies (Regulation) Act, 2005 governing Credit Information Companies, all accounts irrespective of their status (both Good Standing and Delinquent accounts) have to be maintained for a minimum period of 7 years from the date the account was last reported.
Raju Shah
Replied to Rajesh comment 7 years ago
It is true that information should be maintained for seven year but bank should report as early as possible I.e not after five years. It is not intention of the legislature or RBI according to various principles of regulation, other laws etc
sashi
8 years ago
I won a consumer court case against SBI cards and recieved compensation as the case was decided ex-parte , SBI cards did not bother to appear in the court. A few years later they give my details to CIBIL database. What kind of injustice is this? Why did CIBIL did not afford me an opportunity to explain , before including my details in the database. Is this fair? SBI cards did not bother to come to court to explain the situation.
Please help and advise
sashi

[email protected]
Raju Shah
Replied to sashi comment 7 years ago
R u requested to send me copy the judgement. I m facing with same issue. Reporting of inaccurate and wrong information after seven years by standard and chartered bank . So. Send the same at my email add [email protected]
Sucheta Dalal
Replied to sashi comment 8 years ago
Greetings. There is a simple way to correct it online on CIBIL's website. Otherwise to contact Moneylife and meet the Disha Counsellor for free help. It can be resolved fairly easily.
But yes, we agree that SBI played a dirty trick.
Do read our cover on credit scores: http://www.moneylife.in/article/credit-s...
sashi
Replied to Sucheta Dalal comment 8 years ago
Thanks Sucheta , will give it a try. CIBIL , should ask SBI whether the consumer had filed any case in the court. As it now looks , it is pretty one way traffic , CIBIL is just waiting to oblige the card companies.
sashi
8 years ago
I won a consumer court case against SBI cards and recieved compensation as the case was decided ex-parte , SBI cards did not bother to appear in the court. A few years later they give my details to CIBIL database. What kind of injustice is this? Why did CIBIL did not afford me an opportunity to explain , before including my details in the database. Is this fair? SBI cards did not bother to come to court to explain the situation.
Please help and advise
sashi

[email protected]
Ajay Sengupta
8 years ago
Seems like the author is more concerned about the other buereau's such as Experian and Equifax than actually caring about the Indian customers. How does data parity among bureaus help customers? Customers are happy going to one bureau and pulling out a report. However, the report needs to be accurate and the solution for this isn't what the author is suggesting - because, there isn't any validation that the other (newer) bureaus can match better than the existing bureau.

If Moneylife foundation really cared about customers and Ms. Sucheta Dalal truly wants to make an impact, than she should fight for one free report per customer with RBI (a system that has been effectively implemented in emerging markets). However, what I see that the incentives are misaligned to get newer bureau the edge and in reality no one cares about the customers. (Besides Point 3 which I of course agree with that the INR 50 for a credit report should be publicised more). So, really, as an educated customer with experience of living and working across the world, I am completely disheartened with the recommendations put forward by monelife.
MDT
Replied to Ajay Sengupta comment 8 years ago
Dear Mr Sengupta,
Thanks for your comment on an article published five months ago. Let me refresh your views. First of all, it was our efforts, especially our managing editor Sucheta Dalal, that resulted in customers at least getting access to their credit reports even by paying a small fee. The points we raised above follow a detailed research, which would go a long way in protecting customers only. In the financial system, nothing comes free and customers who think or want to be financially literate, shouldn't mind paying a small fee to know own credit history/report.
Here is an eye opener for you which tells what happens when there is a monopoly in credit bureaus. http://moneylife.in/article/how-cibil-go...

Thanks again,
MDT
Ajay Sengupta
Replied to MDT comment 8 years ago
Thanks for pointing the article out to me. I have read the article and commented on it as well.

I have nothing against moneylife or the work you guys are doing. I think it is outstanding.

However, I don't think you all understand the nuances of credit report and credit score.

Clarify the following for me -

Who do you think will benefit the MOST if all the bureaus are at the data parity? - Banks, newer Bureaus or Consumers?

What do you think will be more beneficial to a customer in short run and in long run? Empowerment of customers to get Credit report (from any of the bureaus/banks/FIs) relatively easily or by the points you have mentioned in the emails raised by you to RBI?

Please go and see how vague is it for customers to go pull a report from the bank? Why aren't any procedures on operational efficiency highlighted in the note sent to RBI?

Let me paraphrase what I am saying - bureau parity is good, but it is MORE beneficial to the newer bureaus' at this point: which I have no objection with. It's your blog and you have every right to write what you want.

What I am trying to say is there are other stronger and better steps to consumer empowerment that you guys have overlooked!
Sucheta Dalal
Replied to Ajay Sengupta comment 8 years ago
With due respect, I dont think you understand the ground reality at all.

The RBI did not ask our view while framing policy. When moneylife foundation has financial strength we can challenge policy.
I our view a market like ours does not need 4 credit bureaus and we are THE ONLY ONES to have written about the mess at HIGHMARK.

So yes, given a choice we think and have written that 4 are way too much. Having set them up -- that too several years ago - RBI must ensure that each of them has complete data.

In our view, competitive forces will ensure that the newer ones will be more proactive in rectifying dubious mistakes in credit records. They may also be willing to share the information free.
Instead, the RBI has allowed CIBIL to remain a monopoly while it dubiously shares defaulter information with a paid business called credit sudhaar. Why does it do this? Isnt it anti customer? Someone raised it at our open house with the RBI deputy governor.
I am curious why a big admirer of our work, like you say you are, have not noticed that it is only the customer who benefits.

Why do your comments smell of insinuation? Is it because Experian has supported some of Moneylife Foundation's seminars? Well, let us tell you that we invited CIBIL twice -- the first time we had to arm twist them to participate (with some help from the RBI), the second time, as our guests.
As for poor Experian -- for all their help, our big effort at a credit report camp (which was an example of competition working because they offered reports on the spot at a small fee) only exposed the dangers of records and credit history that is not shared equally. It led to a memorandum and cover story, that did not benefit Experian at all.

So how about getting those yellow glasses of suspicion off and looking at what we do?
Better still, this is all social work. Since you know so much, how about volunteering your time to help Moneylife Foundation take up some of the issues that you say we should? We can do a LOT more if experienced people devoted their time in actively working at ways to BENEFIT consumers, rather than sit at a distance and lecture us about what we are not doing. We are a tiny team and work beyond what such a group can deliver. Join us and we will do a lot more.
Sucheta Dalal
Replied to Ajay Sengupta comment 8 years ago

When someone posts comments without reading our efforts for consumers, it is clear there is a vested interest at work.

Moneylife has done plenty to help consumer get reports for a small fee. in fact for Rs 50 you can get it from your bank. Make the effort to read our efforts with the RBI too. But the fact that you have personalised this comment and named me speaks for your motives.
Ajay Sengupta
Replied to Sucheta Dalal comment 8 years ago
Madam, I respect the work you have done. However, I speak because I understand technology and nuances of credit reporting.

All, I am saying is the points raised to RBI are helping newer bureaus than they are helping end customers. What promises that if newer bureau have the same data parity, they won't face the matching issues. Newer bureaus will have the same technical glitches as the older bureau CIBIL is facing! I promise you that even if all the bureaus have the same data, the customers will still be at loss and moreso because now each of the bureau will have a different interpretation of his credit record. If you have to fix anything please fix uniformity in the reporting of information from the bureau and add strong penalties for wrong information! Hope I have clarified myself. Thanks for your prompt response.
Sucheta Dalal
Replied to Ajay Sengupta comment 8 years ago
Did you miss the comment below? WE have demanded a technology solution from the RBI. It is about sharing data uniformly. We have even said how it can be done. How is it that you are quick to judge without reading. And yes, we do talk to technology experts who tell us that it can be done. It is only our pressure that has led to the RBI setting up a task force to examine issues. But you havent noticed that, have you?
Ajay Sengupta
Replied to Sucheta Dalal comment 8 years ago
I don't think I explained myself properly here.

Let's start again. It's not about sharing data uniformly. It is about bureaus generating credit reports uniformly. Let us take an example -

Ajay Sengupta has 5 accounts - one account with five of the bank. Let's say account 1 -5. When Ajay pulls a report from CIBIL, he sees accounts 1-4 and 5 is missing; However, when he pulls from Experian, he sees accounts 1-3 and 5; when he pulls from Equifax, he sees accounts 1,2 and 4.

So, as a customer where should Ajay go to and which report should he believe in? Now you would want me to go to all the three bureaus and rectify information at each of them?

Madam, just like banks, each bureau has a something called a matching algorithm which is internal to the bureau. They use various parameters such as PAN card, phone number etc. to aggregate details at a customer level. Since, each bureau use different logic they aggregate data differently. Even in US market where all three bureaus in question (TransUnion, Experian and Equifax) have data parity and have a uniform way of collating data (through SSN), their credit reports differ. This is because of the internal match logic.

Ask any of the bankers in India and they will tell you the horrors of incorrect information in each of the bureaus.

So, what I am saying isn't that the banks should submit data to the bureau uniformly. The bureaus are smart enough to decipher information given to them. What I am really concerned about is how are they aggregating this data at a customer level?

I am recommending that for customers there should only BE ONE REPORT that he should have to look at and worry about. Now, taking my earlier example, he would have to fight all the three bureaus to get his information corrected. The hassles increase manifold.

My recommendation would be that besides just data parity, you also ask these bureaus to demonstrate that their match logic works fine and that they will be levied heavy penalties for mismatching information because people's lives and financial goals depend on it. The solution of sharing data is only partial and will not solve the cause that you are fighting for!
MDT
Replied to Ajay Sengupta comment 8 years ago
Dear Mr Sengupta,
Thanks again for your comment.
Sir, what example you had used, it is the same issue we have raised with the RBI. The problem is India is not all lenders share all data with all credit bureaus. Once there is level playing field, at least for sharing data across the bureaus, the customer can depend on only one report from any of the bureaus. This is not happening at present and so we are constantly raising the issue.
Hope you understand.
Thanks again,
MDT
Sucheta Dalal
Replied to Ajay Sengupta comment 8 years ago
Buddy, I am now tired of this. It is exactly what we PROVED to the RBI when 15 moneylifers took their credit reports from Experian and compared facts.

Further, Yogesh and I applied to all three and made a comparison.
That is why we had a cover story.
Only extreme arrogance will allow you to assume that we dont know about the different algorithms or are not talking to tech experts.
I dont think I am making myself clear. If identical credit reports had to be produced, one well regulated bureau was ENOUGH. That was our starting point. But this ONE bureau did not even give access to credit reports.
You have IGNORED my request that you use your GYAN to join the fight instead of telling us what to do.
MDT
Replied to Sucheta Dalal comment 8 years ago
Rightly said. Hope Mr Sengupta joins us and share his immense knowledge for the benefit of common savers. @Mr Sengupta....hope to meet you in person soon at Moneylife Foundation. Lets make a beginning for the change. Thanks, MDT
Sucheta Dalal
9 years ago
Apropos the comments below, there is a simple technology solution for data sharing in a safe manner which does not require repeated sharing of data.

So lets not get hasty about concluding what can be implemented and what cannot be done. The solutions too have been outlined to the RBI by us as well as by the new credit bureaus. What is lacking is implementation, supervision, savers feedback etc.

Wouldnt our readers be more concerned with what benefits them than worry about technology issues? I again reiterate, the solution is simple, it needs RBI to act on something that is of utmost importance to the ordinary person !
chandra shekhar
9 years ago
* every INITIATIVE made in Public or in Organisations interest need to be appreciated !
** this blog "RBI advises Banks..." should have been made Public after, it has been CONSIDERED "partially or in totality" which as Moneylife says is "under consideration" AND is being "looked into"...!!
*** all past-n-present system can be ADDRESSED if, those who have SERVED in these departments in the PAST can be re-called and are engaged to UPDATE till DATE,
with the help of new-tech. in place and those who understand the East-West-North-South of BANKING as a Whole ...!!!
reg.,
Chandra
Ashit Rasiklal Shroff
9 years ago
Please read as Point no:1 & not point no:4 in my below comment
Ashit Rasiklal Shroff
9 years ago
The points raised by ML to RBI are well justified. However for practical reasons the point no 4 will never get implemented due to the below mentioned reasons:
1. The lending industry is deeply spread over Public/Pvt/Foreign/Cooperative Banks/MFI's/DCB's/RRB's/NBFC's etc. The total number of lending institutes is very large somewhere in the region of 18000 & more.
2.All the four credit bureaus have their own data submission layout and are different.No two credit bureaus data submission layout is the same.
3.All the credit bureaus have invested heavily in technology (Hardware & Software)- Now to make any changes(back end database changes)to arrive at a common layout will entail additional investment.
4.All the lending institutes who are already members of a credit bureau have invested in technology( data extraction tools for submission of their data to the credit bureau- front end changes)& submission of data to all credit bureaus will be a costly affair for the smaller lenders like coop banks/nbfc.These smaller lenders cannot afford this additional cost of data submission to all the credit bureaus.
5.Why will all the lenders submit their data to all the credit bureaus and incur additional expenses without any corresponding additional benefits is the larger question? What additional benefit will they get by submitting their data to all the credit bureaus?
6.Instead of making mandatory the lending data submission to all the four credit bureaus what is required today is the mandatory submission of Suit Filed,Wilful Default data which is currently not happening.As a result ,the prime desired objectives of the CIC Act viz Fraud Prevention & NPA reduction are not met fully in the current scenario.
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