Lok Sabha Question No. 3456 (UNSTARRED), answered on 2025-08-11
Subject: Misuse of CIBIL Score by Banks
Ministry: FINANCE
Asked by: Shri S Venkatesan, Shri Kodikunnil Suresh

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA UNSTARRED QUESTION NO- 3456

ANSWERED ON MONDAY, AUGUST 11, 2025/SRAVANA 20, 1947 (SAKA)

## MISUSE OF CIBIL SCORE BY BANKS

## 3456. SHRI S VENKATESAN: 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  individuals'  financial data;

(c)  whether the Government has received any complaints regarding 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 any 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  on e  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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