Submission of Information to Credit Information Companies (CICs) by ARCs

The Reserve Bank of India (RBI) has issued new guidelines requiring all Asset Reconstruction Companies (ARCs) to bolster their credit information reporting standards in line with those followed by banks and Non-Banking Financial Companies (NBFCs). The circular, aimed at improving the tracking of borrowers’ credit histories even after loans are transferred to ARCs, mandates that ARCs become members of all Credit Information Companies (CICs) and maintain up-to-date credit data submissions

Key Requirements of the New Guidelines:

• Mandatory CIC Membership: All ARCs are now required to join all CICs, moving beyond the previous guideline that only necessitated membership with one CIC. The ARCs must submit borrower data using the RBI’s Uniform Credit Reporting Format, ensuring uniformity across credit data submissions.
• Regular Data Submission: The RBI has stipulated that ARCs update their credit information on a fortnightly basis, or even more frequently if mutually agreed upon with the CICs. This aims to ensure that credit records remain current and accurate, providing a reliable credit history for borrowers whose loans have been acquired by ARCs.
• Data Rectification: If credit data submissions are rejected by a CIC, ARCs must address and correct the errors within seven days, ensuring swift rectification and resubmission to maintain data integrity.
• Adoption of Best Practices: To streamline credit reporting, the RBI directs ARCs to implement a Standard Operating Procedure (SOP) for CIC-related matters. This SOP should include:

1. ARCs shall provide requisite customer information, including identifier information, to CICs.
2. ARCs shall ensure that the records submitted to CICs are updated regularly and that no instances of repayment, including that of the last instalment, are left unreported.
3. Instances of non-updation of repayment information may be avoided by centralizing the issue of no-objection certificates and providing information to CICs.
4. ARCs shall appoint a nodal officer for dealing with CICs.
5. Customer grievance redressal shall be given top priority especially in respect of complaints relating to updation/ alteration of credit information.
6. Grievance redressal in respect of credit information should be integrated with the existing systems, if any, for grievance redressal.
7. ARCs should abide by the period stipulated under CICRA and the Rules and Regulations framed thereunder in respect of updation, alteration of credit information, resolving disputes, etc. Procedure prescribed under Rules 20 and 21 of the Credit Information Companies Rules, 2006 in this regard should be adhered to. Deviations from stipulated time limits should be monitored and commented upon in the periodical reports/ reviews put up to the Board.

ARCs must establish these processes by January 1, 2025, ensuring full compliance with the updated guidelines.

This directive, issued under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, applies to all ARCs. By enhancing credit reporting standards, the RBI aims to create a more reliable credit information environment for borrowers and lenders alike, mitigating potential disruptions in credit histories that can affect borrowers’ credit scores. This step underscores the RBI’s commitment to promoting transparency and accuracy in India’s credit ecosystem.