Lok Sabha Question No. 3991 (UNSTARRED), answered on 2025-08-18
Subject: Misuse of CIBIL Score by Banks
Ministry: FINANCE
Asked by: Shri Kodikunnil Suresh

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA UNSTARRED QUESTION NO- 3991

ANSWERED ON MONDAY, AUGUST 18, 2025/SRAVANA 27, 1947 (SAKA)

## MISUSE OF CIBIL SCORE BY BANKS

## 3991. SHRI KODIKUNNIL SURESH:

Will the Minister of FINANCE be pleased to state:-

(a)  whether  the  Credit  Information  Bureau  (India)  Limited  (CIBIL)  and  other  credit rating  agencies  are  governed  under  any  specific  legal  or  regulatory  framework  in  the country;

(b) if so, the details of the laws or regulations that empower and regulate the operations of  CIBIL,  particularly  in  regard  to  the  collection,  storage  and  sharing  of  individual's financial data;

(c)  whether  the  Government  has  received  complaints  regarding  the  transparency, reliability  or  potential  misuse  of  CIBIL  scores  by  banks,  NBFCs  or  other  financial institutions; and

(d) whether the Government proposes to bring about reforms or introduce legislation to enhance accountability and ensure consumer protection in the credit scoring system and if so, the details thereof?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

(a) and (b): TransUnion CIBIL Limited, which was formerly Credit Information Bureau (India) Limited and referred to as 'CIBIL' is one of the credit information companies (CICs). CICs are governed  by  the  provisions  of  the  Credit  Information  Companies  (Regulation)  Act,  2005 (CICRA), the rules and regulations made thereunder. All CICs are registered with and regulated by the Reserve Bank of India (RBI).  In terms of provisions of CICRA, RBI is empowered to determine  policy  in  relation  to  functioning  of  CICs  and  all  CICs  are  bound  to  follow  such policies.

In terms of provisions of CICRA, functions of CICs include, inter alia, the following -

- (i) to collect, process and collate information on trade, credit and financial standing of the borrowers;
- (ii) to provide credit information and credit scoring to its specified users.

Further,  as  per  the  Credit  Information  Companies  Regulations,  2006,  every  CIC  and  credit institution (CI) are required to retain credit information collected, maintained and disseminated by them for a minimum period of seven years.

(c) and (d):   RBI has proactively taken measures for strengthening and improving the efficacy of the grievance redressal mechanism and customer service provided by CIs and CICs, under the broad  framework  of  CICRA,  2005.  RBI  has  extended  the  alternate  grievance  redressal mechanism  under  Reserve  Bank  -  Integrated  Ombudsman  Scheme,  2021  (RBIOS)  to  cover grievances against CICs also. In case of being aggrieved by an act or omission of a CIC or CI, resulting in deficiency in service, the customer can file a complaint under RBIOS for redressal.

RBI has issued Master Direction on Credit Information Reporting, 2025, which, inter alia , include following  provisions  to  improve  delivery  of  services,  enhance  accountability  and  ensure customer protection to the common man:

- (i) CICs have been directed to provide access to one free full credit report, including credit score, in an electronic format, to individuals whose credit score is available with them.
- (ii) CICs, with a view to strengthen the internal grievance redressal mechanism by enabling a review  of  customer  complaints  before  their  rejection,  have  been  directed  to  appoint Internal Ombudsman to act as an independent apex level authority within the CIC.
- (iii) CICs and CIs have been directed to implement the compensation mechanism for delayed updation or rectification of credit information.
- (iv) In  case  of  wrongful  denial  of  compensation  by  CIs  or  CICs,  the  complainant  can approach the RBI Ombudsman under RBIOS.
- (v) CICs  have  been  directed  to  notify  customers  via  SMS or  email,  when  their  Credit Information Report (CIR) is accessed by the Specified Users and such enquiry reflects in the CIR of the borrower.
- (vi) CIs  have  been  directed  to  send  alerts  through  SMS  or  email  to  customers,  while submitting  information  to  CICs  regarding  default  or  days  past  due  in  existing  credit facilities.
- (vii) CIs  and  CICs  have  been  directed  to  undertake  Root  Cause  Analysis  (RCA)  of  the customer grievances at least on a half-yearly basis.

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