Lok Sabha Question No. 958 (UNSTARRED), answered on 2025-02-10
Subject: Challenges Faced by First Time Borrowers due to CIBIL Score
Ministry: FINANCE
Asked by: Shri Maddila Gurumoorthy

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA

UNSTARRED QUESTION NO-958

ANSWERED ON MONDAY, FEBRUARY 10, 2025/MAGHA 21, 1946 (SAKA)

## CHALLENGES FACED BY FIRST TIME BORROWERS DUE TO CIBIL SCORE

## 958. SHRI MADDILA GURUMOORTHY

Will the Minister of FINANCE be pleased to state:-

(a)  whether  the  Government  is  aware  of  the  challenges  being  faced  by  first-time borrowers and informal sector workers who have limited or no access to credit due to low or non-existent CIBIL scores;

(b)  whether  the  Government  is  considering  any  measures  to  ensure  that  first-time borrowers and individuals from the informal sector can access credit despite their limited credit history or lack of formal income documentation;

(c)  the  steps  being  taken  to  address  the  issue  of  significant  CIBIL  score  drops  due  to minor  delays  in  repayments  and  the  impact  of  such  drops  have  on  the  ability  of individuals to secure loans; and

(d) the steps being taken to reform the credit rating system to be more inclusive, fair, and flexible for the common man particularly those from the informal sector or with limited financial literacy?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE

## (SHRI PANKAJ CHAUDHARY)

(a) to (d): Credit Information Report (CIR), including credit score, is provided by Credit Information  Companies  (CICs)  based  on  the  credit  history  of  borrowers,  which  are considered by Credit Institutions (CIs)  for assessment of  credit facilities.  Based on  the credit information furnished by CIs, credit scores are derived by CICs through respective proprietary models.

CIs undertake assessment of credit facilities based on their Board approved policies and extant regulatory guidelines of the Reserve Bank of India (RBI).

In  terms  of  RBI's Master  Direction  on  Credit  Information  Reporting,  CIs  have  been advised that firsttime borrowers' loan applications should not be rejected just because they have no credit history.

The master direction, inter- alia, includes provisions for improving delivery of services to the common man:

- (i) access to one free full credit report including credit score, in an electronic format, to individuals
- (ii) alternate grievance redressal mechanism under Reserve BankIntegrated Ombudsman Scheme, 2021 to cover grievances against CICs
- (iii) information to the customers about reasons for the rejection of their request for data correction, if any, to enable such customers to better understand the issues in CIR
- (iv) implementation of compensation mechanism for delayed updation/ rectification of credit information
- (v) notification  to  customers  via  SMS  or  email  when  their  CIR  is  accessed  or reporting of any default/ days past due in existing credit facilities

It  is  provided  in  the  Credit  Information  Companies  (Regulation)  Act,  2005  that  a borrower or client may request the concerned CIC or CI for correction/updation of his credit information, and the concerned CIC or CI are required to take appropriate steps to update the credit information within thirty days of being requested to do so.

With regard to formalize the individuals from the informal sector and to empower noncorporate,  non-farm  small  and  micro  enterprises  including  those  who  are  from  the informal sector, the Government has launched various schemes including, inssster alia , the following:

- (i) PM SVANidhi;
- (ii) Pradhan Mantri Mudra Yojana;
- (iii) Stand-Up India;
- (iv) PM Vishwakarma; and
- (v) Prime Minister's Employment Generation Programme

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