What changed
RBI reminded co-operative banks that they are classified as credit institutions under the Credit Information Companies (Regulation) Act, 2005, and must join at least one credit information company within the stipulated timeframe. Banks are required to supply credit data in the format prescribed by the credit information company and be ready for data exchange as soon as these companies become operational.
What it means for you
Co-operative banks now have a clear regulatory obligation to participate in the credit information ecosystem, which will improve credit assessment and reduce default risk. Lenders must invest in building robust databases and ensure timely data submission to avoid non-compliance. The fee for borrowers requesting their credit information is capped at Rs. 50, as per RBI regulations.
What you must do
- Initiate steps to build a comprehensive credit database covering both positive and negative data.
- Apply for membership of at least one credit information company without delay.
- Ensure readiness to supply credit data in the format prescribed by the credit information company.
- Comply with Section 21 of the Act by providing credit information copies to borrowers on request at a maximum fee of Rs. 50.
- Review and align internal processes with the Credit Information Companies (Regulation) Act, 2005 and its regulations.
Who it affects
All State Co-operative Banks, All Central Co-operative Banks, Credit information companies
What is the deadline for co-operative banks to become members of a credit information company?
The Act requires every credit institution to become a member within three months from the commencement of the Act (December 14, 2006) or any extended time allowed by RBI. This circular urges banks to act urgently if they have not yet complied.
What data must co-operative banks supply to credit information companies?
Banks must supply both positive and negative credit data in the format prescribed by the credit information company. The success of the system depends on the quality and timeliness of data provided.
Can a borrower request their credit information from a co-operative bank?
Yes, under Section 21 of the Act, any person applying for credit can request a copy of the credit information obtained by the bank. The bank must provide it subject to a maximum fee of Rs. 50 as per RBI regulations.