Synopsis: Starting January 2024, RBI mandates fortnightly updates to credit information, benefiting borrowers with faster credit score reflections and aiding banks in accurate risk assessment.
Starting January 1, 2024, the Reserve Bank of India (RBI) will require banks and credit information companies (CICs) like CIBIL to update credit information every fortnight instead of the current monthly updates. This change is expected to benefit borrowers and banks alike by providing more accurate and up-to-date credit information.
Key Highlights of the New Rule:
Fortnightly Updates: CICs and banks will now update the credit information they collect and maintain on the 15th and the last day of every month, or even more frequently if required. This is a shift from the current practice of monthly updates.
Timely Submission: Banks must submit their credit information to CICs within seven days following the end of each reporting period. This ensures that the data is recent and reflects borrowers' latest financial activities.
Faster Data Processing: CICs will be required to process and update the received data within five days, down from the previous seven days. This means credit scores will reflect more current information sooner.
Compliance Monitoring: The RBI will monitor compliance by requiring CICs to report any banks failing to adhere to the new submission timelines. These reports will be submitted to the RBI’s Department of Supervision semi-annually, on March 31 and September 30.
Impact on Borrowers:
The new rule will allow borrowers who have recently repaid loans or made significant payments to see their improved credit scores more quickly. This can lead to better credit opportunities and lower interest rates for those with high credit scores. For banks, this change enhances the accuracy of risk assessments, leading to more informed lending decisions.
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