What changed
Previously, ARCs only needed membership in at least one CIC. Now they must join all CICs and submit data in the uniform credit reporting format. Data must be updated fortnightly (or shorter intervals) and rejected data rectified within seven days. ARCs must also adopt a standard operating procedure covering customer information, grievance redressal, and a nodal officer.
What it means for you
Banks and NBFCs transferring loans to ARCs can now rely on complete credit histories post-transfer, reducing information asymmetry. ARCs face stricter compliance: multi-CIC membership, regular data updates, and faster error correction. This aligns ARC reporting norms with those of banks and NBFCs, enhancing credit discipline.
What you must do
- Ensure your ARC becomes a member of all CICs by January 1, 2025.
- Set up systems to submit borrower data fortnightly in the RBI-prescribed uniform credit reporting format, or at shorter intervals as mutually agreed with the CIC.
- Establish a standard operating procedure for CIC matters, including a nodal officer and integrated grievance redressal.
- Rectify any rejected data from CICs within seven days of receipt.
- Update repayment records, including the last instalment, and centralize no-objection certificate issuance.
Who it affects
All Asset Reconstruction Companies, Banks and NBFCs transferring loans to ARCs, Credit Information Companies (CICs), Borrowers whose loans are transferred to ARCs
Why must ARCs now join all CICs instead of just one?
To align with bank and NBFC norms and ensure a complete credit history is maintained when loans are transferred, preventing data gaps that could affect borrower credit scores.
What happens if an ARC fails to rectify rejected data within seven days?
Deviations from the stipulated time limit must be monitored and reported to the ARC's board in periodic reviews, potentially leading to supervisory action.
Does this circular apply to ARCs that have not yet started operations?
Yes, the guidelines apply to all ARCs, and they must have systems in place by January 1, 2025, regardless of operational status.