Bi-weekly credit updates to benefit lenders and borrowers

In a move aimed at providing a more accurate and up-to-date picture of borrowers’ financial health, credit institutions (CIs) will now have to report credit information to credit information companies (CICs) on a fortnightly basis. This is a significant increase from the current monthly reporting frequency.

RBI Governor Shaktikanta Das, in its Statement on Developmental and Regulatory Policies, issued on 8 August, said, "At present credit institutions (CIs) are required to report the credit information of their borrowers to credit information companies (CICs) at monthly or such shorter intervals as mutually agreed between the CI and CIC. To provide a more up-to-date picture of a borrower’s indebtedness, it has been decided to increase the frequency of reporting of credit information to CICs from monthly intervals to fortnightly basis or at such shorter intervals as mutually agreed between the CI and CIC."

"The fortnightly reporting frequency would ensure that credit information reports provided by CICs reflect more recent information. This will be beneficial to both borrowers and lenders (CIs). Borrowers will have the benefit of faster updation of information, especially when they have repaid the loans."

The decision is expected to benefit both borrowers and lenders. Borrowers will see a faster reflection of loan repayments on their credit reports, which can positively impact their credit scores. Lenders, on the other hand, will have access to more recent data, enabling them to make better-informed lending decisions and reduce the risk of over-indebtedness.

Adhil Shetty, CEO of BankBazaar.com, said "The credit score is not a stationary number that is computed every month or every year. Each time a request is made for your credit score or credit report, it gets computed dynamically at the time the request is made based on the data available at that point in time. More frequent reports to the CIC means there’s faster updation of information, which is good for both, the consumer, as well as the lender. Borrowers will get to see the change in the status of their loans much sooner, which is very important when you make a prepayment or close your loan."

The new reporting frequency will allow CICs to provide lenders with a more comprehensive and timely view of a borrower’s creditworthiness. This is expected to lead to improved risk assessment and management.

Rajesh Kumar, MD & CEO, TransUnion CIBIL, “This is a very progressive move which will significantly strengthen the credit information ecosystem. With more frequent data reporting by banks and credit institutions, CICs will be able to update credit records faster and this will translate into more updated data being available for making informed lending decisions by credit grantors. This will also help in resolving consumer disputes faster based on updated data in the credit records. Credit information solutions help create economic opportunity for millions of people in India, and we take our responsibility to deliver accurate data very seriously. As India’s pioneer credit information company, we work constantly to strengthen the credit information ecosystem for the public good.”