Registered credit bureau customers can now contact the Reserve Bank of India (RBI) for faster resolution of their credit scores and related complaints. Credit information companies (CICs), more commonly known as credit bureaus, will be included in the central bank’s integrated ombudsman scheme, RBI Governor Shaktikanta Das said on Friday when announcing the results of the l review of monetary policy.
“This will provide a free alternative recourse mechanism to RE (regulated entity) customers for grievances against CICs,” according to the Development and Regulatory Policy Statement.
Moneylife received numerous complaints from individual borrowers who reported discrepancies in their credit reports issued by CICs, resulting in financial setbacks for them such as loan application rejections or poor credit ratings rendering them ineligible at the best interest rates from financial institutions. Now, such borrowers can file such grievances against CICs with the Reserve Bank-Integrated Ombudsman Scheme (RB-IOS) 2021.
There are currently four CICs in India: Equifax, Experian, TransUnion CIBIL and CRIF Highmark. In addition, these companies will now also have to set up an internal mediation framework.
The Integrated Ombudsman Scheme was established by RBI in 2021 to allow consumers to lodge grievances against registered entities for deficiency in their services if such complaints are not addressed satisfactorily or in a timely manner by the regulated entities (ER ).
The program covers scheduled commercial banks including city cooperative banks, non-bank financial corporations (NBFCs) and primary unscheduled cooperative banks with a deposit size of ₹50 crore and above.
The central bank has also mandated the CICs to have their own internal ombudsman (IO) framework to strengthen the internal handling of complaints by the CICs themselves. This will be in addition to the existing customer recourse system these companies may have.
Regarding outsourcing, RBI said REs are increasingly using outsourcing as a way to cut costs as well as to benefit from expertise not available in-house.
Although outsourcing a licensed activity is an RE business decision, it exposes REs to various risks.
RBI has, from time to time, issued guidelines on managing the risks associated with the outsourcing of certain activities by REs.
“In view of the growing trend towards outsourcing, the framework for REs to manage the associated risks needs to be strengthened appropriately. and the Code of Conduct in Outsourcing Financial Services will be released shortly for stakeholder comments,” Mr. Das said.