The Reserve Bank of India (RBI), in its endeavor to improve the customer service provided by Credit Information Companies (CICs) and Credit Institutions (CIs), has issued a comprehensive directive. Dated October 26, 2023, this directive emphasizes enhancing the grievance redress mechanism and customer service in this sector. This article delves into the key aspects of the RBI’s directive and its implications.
1. Background and Announcement: The directive stems from the announcement made in the Statement on Developmental and Regulatory Policies, released as part of the Bi-monthly Monetary Policy Statement for 2023-24 on April 6, 2023. The RBI laid out its intent to establish a framework that strengthens the grievance redress mechanism and customer service within the CICs and CIs.
2. Directive Highlights:
- The RBI, exercising its authority under the Credit Information Companies (Regulation) Act, 2005, has issued a series of directives to be implemented by CICs and CIs.
- The key directives include:
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- Sending customer alerts when their Credit Information Reports (CIR) are accessed by Specified Users (SUs).
- Organizing special awareness campaigns to sensitize customers about the benefits of providing mobile numbers and email IDs.
- Appointing dedicated nodal points for CICs to handle customer grievances.
- Conducting Root Cause Analysis (RCA) of customer complaints and sharing results with the top management.
- Informing customers about reasons for rejecting data correction requests.
- Regular review of the ‘Search & Match’ logic algorithm by CICs.
- Timely ingestion of credit information data and disclosing complaints on CIC websites.
- Providing easy access to Free Full Credit Reports (FFCR) once a year.
3. Effective Date: The directions will become effective six months from the date of the circular’s issuance. CICs and CIs are required to establish the necessary systems and processes to implement these directions within this timeframe.
4. Penal Action: CICs and CIs that do not adhere to these directions may face penal actions in line with the provisions of the Credit Information Companies (Regulation) Act, 2005.
5. Conclusion: The RBI’s directive signifies a commitment to improve customer service and grievance redress mechanisms within the domain of Credit Information Companies and Credit Institutions. By providing clear guidelines and a timeframe for implementation, the RBI aims to enhance transparency and efficiency in this sector. Ensuring that customers are well-informed and their grievances addressed promptly is crucial for maintaining trust and credibility in the financial ecosystem. This directive aligns with the broader goals of regulatory bodies to safeguard the interests of consumers and maintain the integrity of the credit information system.
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Reserve Bank of India
Strengthening of customer service rendered by Credit Information Companies and Credit Institutions
RBI/2023-24/73
DoR.FIN.REC.49/20.16.003/2023-24
October 26, 2023
All Commercial Banks (including Small Finance Banks, Local Area Banks and Regional Rural Banks, and excluding Payments Banks)
All Primary (Urban) Co-operative Banks/ State Co-operative Banks/ Central Co-operative Banks
All Non-Banking Financial Companies (including Housing Finance Companies)
All-India Financial Institutions (Exim Bank, NABARD, NHB, SIDBI and NaBFID)
All Asset Reconstructions Companies
All Credit Information Companies
Dear Sir/ Madam
Strengthening of customer service rendered by Credit Information Companies and Credit Institutions
Please refer to para 4 of the Statement on Developmental and Regulatory Policies released with the Bi-monthly Monetary Policy Statement 2023-24 on April 6, 2023, wherein it was announced that a comprehensive framework will be put in place for strengthening and improving the efficacy of the grievance redress mechanism and customer service provided by the Credit Institutions (CIs) and Credit Information Companies (CICs).
2. Accordingly, in exercise of the powers conferred by sub-section (1) of section 11 of the Credit Information Companies (Regulation) Act, 2005 (CICRA, 2005), the Reserve Bank of India directs CICs and CIs to implement the directions as detailed below:
2.1. Intimation of access to Credit Information Report and updation of credit information with Credit Information Companies
a. CICs shall send alerts through SMS/ email to customers when their Credit Information Report (CIR) is accessed by the Specified Users (SUs) as defined in sub-section (l) of section 2 of CICRA, 2005, wherever mobile number/ email ID details of the customers are available. The alerts shall be sent by CICs only when the CIR enquiry reflects in the CIR of the customer.
b. CIs shall send alerts through SMS/ email to customers while submitting information to CICs regarding default/ Days Past Due (DPD) in existing credit facilities, wherever the mobile number/email ID details are available.
c. To enable sending of alerts through SMS/ email, the Uniform Credit Reporting Format for reporting credit information by CIs to CICs has been modified as detailed in Annex (Item 1).
d. CIs are advised to organise special awareness campaigns to sensitise their customers about benefits of submission of their mobile numbers/ email IDs.
2.2. Setting up of Nodal points/ officials by CIs
a. CIs shall have a dedicated nodal point/ official of contact for CICs for redress of customer grievances. Details of the nodal point/ official along with email ID and telephone/ mobile number shall be furnished by CIs to CICs.
b. CIs shall inform CICs of any changes in the nodal points/ official within five (5) calendar days of such a change.
2.3. Root Cause Analysis of the Complaints by CIs
a. CIs shall undertake Root Cause Analysis (RCA) of the customer grievances at least on a half yearly basis. CIs shall also use, among others, information on data rejected by the CICs and Data Quality Index (DQI) provided by CICs as sources of information for carrying out RCA.
b. Analysis of the RCA shall be reviewed by the Top Management of CIs, at least, on an annual basis.
2.4. Reasons for rejection of requests for data correction by CIs
a. CIs shall inform the customers the reasons for the rejection of their request for data correction, if any, to enable such customers to better understand the issues in the CIR.
b. A list of reasons for rejection of requests shall be circulated by CICs to all CIs. CIs shall use the same while communicating the rejections of the request for data correction made by customers/ CICs during the grievance redress process.
2.5. Periodic review of match logic algorithm by CICs
a. CICs shall have a board-approved policy for undertaking periodic review (at least on a half-yearly basis) of the ‘Search & Match’ logic algorithm implemented by them to provide Credit Information Report (CIR) of a borrower.
b. Root Cause Analysis (RCA) of the complaints being undertaken by CICs shall be used to identify issues in the existing ‘Search & Match’ logic algorithm.
c. Results of the RCA and subsequent changes in the search and match logic shall be placed before the Board of Directors of the CIC for review.
2.6. Ingestion of credit information data by CICs
a. CICs shall ingest credit information data received from the Credit Institutions (CIs) as per its data acceptance rules, into their databases within seven (7) calendar days of its receipt from the CIs.
b. In case of data rejection, CICs shall communicate to the concerned CI, regarding rejection of the data with reasons, within seven (7) calendar days of receipt of the data.
2.7. Disclosure of complaints on credit information reporting by CICs
CICs shall disclose on their websites, details of complaints registered against them and CIs as per the format given in Annex (Table 1 and 2).
2.8. Easy access to Free Full Credit Report for the individuals by CICs
CICs shall provide easy access to Free Full Credit Report1 (FFCR) including credit score, once in a year (January- December), to individuals whose credit history is available with the CIC by displaying the link prominently on their website (on the Home page itself) so that individuals are able to access their FFCR conveniently.
3. The directions shall come into effect six (6) months from the date of this circular. CICs and CIs are directed to put in place necessary systems and processes to implement these directions within this period.
4. CICs and CIs which contravene or default in adherence to the above directions shall be liable for penal action as per the provisions of CICRA, 2005.
Yours faithfully,
(R. Lakshmi Kanth Rao)
Chief General Manager-in-Charge
Encl. Annex
Notes:
1 Please refer to circular DBR.CID.BC.No.11/20.16.042/2016-17 dated September 1, 2016 on Free Annual Credit Report to Individuals.
