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RBI expands Data Quality Index to commercial and microfinance segments

Current · Source: Reserve Bank of India · RBI/2023-24/62 · issued 20 Sep 2023 · ~2 min read
Quick answerRBI mandates Credit Information Companies to prepare Data Quality Index (DQI) for commercial and microfinance segments by March 31, 2024. Monthly numeric scores at CI and file level must be shared with credit institutions, with half-yearly industry benchmarks and decline reasons.
The rule, in the simplest words
How it plays out — a real example

A credit & lending officer in Indore receives a monthly DQI score from the CIC showing her bank's commercial loan data quality dropped. She investigates and finds missing borrower IDs in microfinance files. She fixes the errors and reports the corrective steps to her bank's top management within two months, as the RBI rule requires.

What changed

Previously, DQI was only applied to consumer segment data submissions. Now, CICs must create DQIs for commercial and microfinance segments as per new annexures. CICs will provide monthly numeric scores at both CI and file level, compute industry-level DQIs by category, and share half-yearly rolling benchmarks.

What it means for you

Banks and lenders must now track data quality scores for commercial and microfinance portfolios, not just consumer. Poor scores trigger mandatory decline explanations from CICs and require half-yearly reviews by top management. This pushes institutions to improve data accuracy across all lending segments to avoid regulatory scrutiny.

What you must do

Who it affects

All Commercial Banks including Small Finance Banks, Local Area Banks, RRBs, All Primary (Urban) Co-operative Banks, State Co-operative Banks, Central Co-operative Banks, All-India Financial Institutions (Exim Bank, NABARD, NHB, SIDBI, NaBFID), All Non-Banking Financial Companies including Housing Finance Companies, All Asset Reconstruction Companies, All Credit Information Companies

❓ Common questions

When do CICs need to start providing DQI scores for commercial and microfinance segments?

CICs must provide these DQIs to all credit institutions by March 31, 2024, and thereafter on a monthly basis.

What happens if my institution's DQI score declines month-on-month or falls below the industry benchmark?

CICs must provide reasons for the decline to your institution. You are expected to take corrective actions and report to top management within two months of each half-year end.

How is the industry-level DQI benchmark calculated?

CICs compute industry-level DQIs as weighted averages of CI-level scores by category (e.g., Public Sector Banks, NBFCs) monthly. A half-yearly benchmark is the rolling average of the preceding six months' industry scores.

📜 Read the original circular — full text as issued by RBI
RBI/2023-24/62 DoR.FIN.REC.39/20.16.056/2023-24 September 20, 2023 All Commercial Banks (including Small Finance Banks, Local Area Banks and Regional Rural Banks) All Primary (Urban) Co-operative Banks/State Co-operative Banks/ Central Co-operative Banks All-India Financial Institutions (Exim Bank, NABARD, NHB, SIDBI and NaBFID) All Non-Banking Financial Companies (including Housing Finance Companies) All Asset Reconstruction Companies All Credit Information Companies Dear Sir/ Madam, Data Quality Index for Commercial and Microfinance Segments by Credit Information Companies Please refer to our circular DBOD.No.CID.BC.127/20.16.056/2013-14 dated June 27, 2014 , inter alia setting out a common Data Quality Index (DQI) for assessing the quality of data submissions by Credit Institutions (CIs) to Credit Information Companies (CICs) and improving the same over a period of time. Currently, the DQI is being used for data submitted under the consumer segment. 2. With a view to enable further implementation of DQI, it has been decided that CICs shall prepare DQIs for Commercial and Microfinance segments also as per Annex I and II , respectively. CICs shall provide the DQIs for Commercial and Microfinance segments to all CIs latest by March 31, 2024. 3. Further, CICs are advised as under: CICs shall provide DQIs for Commercial and Microfinance segments in the form of numeric scores on a monthly basis to all member credit institutions. DQI scores for Commercial and Microfinance segments shall be provided at CI and file level. The DQI scores for Commercial and Microfinance segments at CI level shall be computed as weighted average of file level DQI scores of commercial and microfinance segment respectively of that CI. CICs shall compute industry level DQIs for each of the three reporting segments 1 as weighted average of the CI level DQI in their respective category (e.g. Public Sector Banks, Private Sector Banks, Foreign Banks, Co-operative Banks, RRBs, NBFCs etc.) on monthly basis. Further, a half yearly Industry Benchmark shall be calculated as a rolling average of preceding six months Industry level DQI score of respective category of CIs. CICs shall provide reasons for decline in score to each CI, if its (a) CI level score has declined over the previous month or (b) CI level score is lower than the half yearly industry benchmark. CICs shall provide monthly data of CI level DQI and industry level DQI of all segments to Department of Supervision, Reserve Bank of India, Central Office at half yearly intervals as on September 30 and March 31 each year, for information and monitoring purposes. 4. CIs are advised to undertake half yearly review of the DQI for all segments to improve the quality of the data being submitted to CICs. Corrective steps taken on the above issues along with a report on the same shall be placed before its top management by each CI for review within two months from the end of that half-year. Yours faithfully (J. P. Sharma) Chief General Manager Encl: Annex I and II 1 Viz. Consumer, Commercial and Microfinance segments
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2023-24/62 · issued 20 Sep 2023. The plain-English explanation above is BankPulse’s own independent summary.
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Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (All Commercial Banks including Small Finance Banks, Local Area Banks, RRBs, All Primary (Urban) Co-operative Banks, State Co-operative Banks, Central Co-operative Banks, All-India Financial Institutions (Exim Bank, NABARD, NHB, SIDBI, NaBFID), All Non-Banking Financial Companies including Housing Finance Companies, All Asset Reconstruction Companies, All Credit Information Companies), your first concrete step on “RBI expands Data Quality Index to commercial and microfinance segments” is: “Ensure your data submissions to CICs for commercial and microfinance segments are accurate and complete before March 31, 2024.” (RBI issued this 20 Sep 2023).

  1. Circular: RBI/2023-24/62 -- RBI expands Data Quality Index to commercial and microfinance segments
  2. Issued: 20 Sep 2023
  3. Action required: Ensure your data submissions to CICs for commercial and microfinance segments are accurate and complete before March 31, 2024.
  4. Action required: Monitor monthly DQI scores from CICs and investigate any month-on-month declines or scores below half-yearly industry benchmark.
  5. Action required: Conduct half-yearly reviews of DQI for all segments and submit corrective action reports to top management within two months of each half-year end.
  6. Action required: Coordinate with your credit information reporting teams to align with new DQI formats in Annex I and II.
  7. Owner: ____________ Target date: ____________
  8. Board/committee approval needed? Y / N
  9. Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.

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Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12537&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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