The Reserve Bank of India (“RBI”) has issued a notification on “Implementation of Credit Information Reporting Mechanism subsequent to cancellation of licence or Certificate of Registration”.
Background:
In view of the Credit Information Companies (Regulation) Act, 2005 (“CICRA”), entities whose licence or Certificate of Registration (“CoR”) has been cancelled by RBI, can no longer be deemed as Credit Institutions (“CIs”) under CICRA and their credit information cannot be accepted by the CICs. In such cases, repayment history of borrowers of these entities is not updated even if these borrowers continue to repay/ clear their dues.
In order to redress the hardship faced by such borrowers, RBI has issued the following directions to CICs and CIs to implement a credit information reporting mechanism subsequent to the cancellation of the licence/CoR of banks/ Non-Banking Finance Companies (NBFCs):
1. All CIs, whose licence or CoR has been cancelled by the RBI will be categorised as “Credit Institutions” under the provisions of CICRA.
2. These CIs should continue to report credit information of the borrowers on-boarded and reported to CICs prior to cancellation of their licence or CoR to all the four CICs till the loan lifecycle is completed or the credit institution is wound up, whichever is earlier.
3. The CIs should have access to Credit Information Reports pertaining to only those borrowers which were onboarded and reported to CICs before the cancellation of their licence/CoR.
4. CICs will not charge the annual and membership fees from these CIs.
5. CICs will tag these CIs as “Licence Cancelled Entities” in the CIR. CICs will base this tagging on the information available on the website of the Reserve Bank of India or the cancellation of licence order received from RBI.
Please note, these instructions will be implemented by 10th April, 2025 i.e. 6 months from date of the Circular.
Please refer to the hyperlink below for a detailed read of the Notification.
Source: Reserve Bank of India
