Reserve Bank of India (RBI) deputy governor M Rajeshwar Rao has called for the adoption of a unique borrower identifier that is secure, verifiable and consistent across the financial system, to enhance the integrity of credit data and foster financial inclusion. Delivering the keynote address at TransUnion CIBIL’s 25th Anniversary Credit Conference in Mumbai on 1st July, Mr Rao said such an identifier is essential for improving credit reporting, minimising duplication and ensuring responsible lending.
“We must move towards a unique borrower identifier, which is secure, verifiable, and consistent across the system,” the deputy governor says, underlining the need to resolve identity mismatches that often result in credit duplication, misreporting, or access denial.
Mr Rao highlighted the pressing need to enhance data freshness in credit reporting, stating that fortnightly updates, as followed currently, are inadequate in a digitally dynamic economy. He advocated for real-time or near real-time reporting which would enable quicker underwriting decisions, timely reflection of repayments or loan closures, and a superior consumer experience.
He also stressed the importance of data quality, noting that it remains the bedrock of responsible lending. RBI has already mandated credit information companies (CICs) to assign monthly data quality index scores to credit institutions, but Mr Rao urged greater collaboration to enhance accuracy further.
Tracing the journey of India’s credit reporting system, the deputy governor credited the Credit Information Bureau (India) Ltd (CIBIL)—now TransUnion CIBIL—for playing a pivotal role in bridging the historical information gap between lenders and borrowers.
RBI initiated the formation of credit information companies (CICs) in 2000, followed by significant reforms in 2014, including standardised data formats, data quality indices and customer grievance redressal mechanisms.
These measures, he says, helped reduce information asymmetry, foster trust in credit systems and enabled the underwriting of unsecured loans, especially for new-to-credit customers.
The RBI deputy governor also highlighted that India’s digital public infrastructure (DPI)—comprising UPI, Aadhaar, DigiLocker, Bharat BillPay, and the account aggregator (AA) framework—has transformed access to credit, especially for the underbanked. The unified lending interface (ULI) is the latest addition, enabling seamless digital access to verified borrower data, even for those lacking formal credit histories, he says.
According to Mr Rao, integration of ULI with rural databases like NABARD’s e-KCC portal and state land records is expected to revolutionise lending to farmers and micro-entrepreneurs, and the future plans include tapping gig economy platforms and e-commerce data for better borrower insights.
India’s credit landscape is shifting from being collateral-based to cashflow- and data-driven, Mr Rao noted. The household debt-to-GDP ratio stood at around 43% in 2024, reflecting broader credit inclusion. The financial inclusion index improved from 49.9 in 2019 to 64.2 in 2024, showing progress in access and delivery.
The RBI deputy governor called the micro, small and medium enterprises (MSME) sector a prime beneficiary of evolving credit systems. "With over 7.3 crore enterprises contributing to one-third of GDP, MSMEs face chronic credit access issues due to a lack of documentation and transparency. Credit reporting, supported by alternative data and digital scoring models, can shift the tide," he added.
Fin-techs have processed around 47% of small-ticket personal loans (under Rs1 lakh) in FY23-24, according to Mr Rao. "Their ability to harness artificial intelligence and machine learning (AI/ML), alternative data, and automation has significantly lowered the cost of delivering credit to remote and underserved areas."
Initiatives like the grameen credit score aim to develop tailored scoring systems for self-help group (SHG) members and rural borrowers, promoting inclusion beyond the traditional banking fold.
Mr Rao also pointed to innovations like the open credit enablement network (OCEN) and open network for digital commerce (ONDC) as next-gen solutions to bridge commerce and credit. "Together, they could enable small sellers and businesses to access credit based on digital transactions and cash flows, without relying on conventional documentation," he says.
While embracing digital lending and emerging technologies like programmable CBDCs and tokenisation of assets, the RBI deputy governor also warned of risks related to data security, model bias, and regulatory oversight.
“Innovation needs to be responsible and accountable. It should not be at the cost of an individual’s rights regarding the use of their personal data,” he says, urging stakeholders to build a credit ecosystem centred on consumer trust, transparency, and financial literacy.
He also stressed that financial awareness must be an ongoing, collective effort—beyond just regulatory mandates.
The deputy governor concluded by asserting that India stands on the cusp of a transformative era in credit delivery, powered by policy, technology, and collaboration. The establishment of credit bureaus, once a foundational step in financial inclusion, continues to be central to this vision.
“Even as the journey continues, the role of the CICs remains integral and important in realising the vision of total financial inclusion,” he added.
