What changed
The RBI circular reminds UCBs of their statutory obligation under the Credit Information Companies (Regulation) Act, 2005 to join at least one CIC. The government had extended the membership deadline to December 31, 2008, and further extension is under consideration. UCBs are now advised to prepare data systems for effective credit information exchange.
What it means for you
UCBs must now prioritize membership in CICs and ensure they can supply both positive and negative credit data in the required format. This will improve credit assessment and risk management for lenders. Non-compliance could lead to regulatory action, and the Rs. 50 fee cap for borrower requests is already in place.
What you must do
- Apply for membership in at least one Credit Information Company immediately if not already done.
- Build and maintain a comprehensive database of borrower credit information, including both positive and negative data.
- Prepare to supply data in the format prescribed by the CIC as soon as they become operational.
- Ensure compliance with the Rs. 50 fee limit for providing credit information copies to borrowers upon request.
Who it affects
All Primary (Urban) Cooperative Banks, Credit Information Companies (CICs), Borrowers seeking credit from UCBs
What is the deadline for UCBs to become members of a Credit Information Company?
The original deadline was three months from the Act's commencement (December 14, 2006), later extended to December 31, 2008. Further extension is under consideration, but UCBs should act now to avoid delays.
Can borrowers get their credit information from UCBs?
Yes, under Section 21 of the Act, any person applying for credit can request their credit information from the bank. The bank must provide it, and the maximum fee is Rs. 50 as per RBI regulations.
What data must UCBs supply to Credit Information Companies?
UCBs must supply both positive and negative credit data in the format prescribed by the CIC. This includes information on all credit facilities granted to borrowers.