There has been an increase in customer complaints regarding the accuracy of information provided by credit information companies in their reports.
The Reserve Bank of India (RBI) on Thursday announced a redressal mechanism for customers’ grievances against credit information companies (CICs) giving inaccurate reports. After its monetary policy meeting ended, RBI said that a comprehensive framework was set up to improve grievance redressal and customer service of credit institutions (CIs) and CICs.
Under this mechanism, CICs were brought under the Reserve Bank Integrated Ombudsman Scheme (RB-IOS). Additional measures such as compensation for delayed updates or rectification of credit information, alerts to customers when their credit information is accessed by CICs, a timeline for CICs to process data received from CIs, and disclosure of customer complaints received by CICs on their websites are also being considered.
RBI said that a detailed guideline for these measures would be released soon. The statement came Thursday following its monetary policy meeting in which it decided to keep the repo rate unchanged at 6.5 per cent. The repo rate hikes by the central bank have been a cause of concern for some people of late due to the corresponding lending rate hikes by the commercial banks.
What Is RB-IOS?
RB-IOS is a dispute resolution mechanism launched by RBI in July 2006. It covers all scheduled commercial banks, regional rural banks, and primary cooperative banks. Customers can file complaints related to ATM transactions, credit card problems, loan disbursals, deposit accounts, etc.
Role of CICs
Credit information companies (CICs) play a vital role in credit information reporting in the Indian financial system. They provide credit reports to lenders and borrowers. However, there has been an increase in customer complaints related to the accuracy of their credit reports and functioning.
Customer Complaints
One of the significant challenges faced by customers is the delayed updation or rectification of credit information. Customers have complained that CICs take a long time to rectify inaccurate information, which can have significant consequences for their creditworthiness. They have also raised the issue of a lack of transparency regarding the use of their credit information.
So, RBI has proposed to provide SMS/email alerts to customers whenever their credit information is accessed from CICs. This would give customers greater control over their personal information and allow them to monitor who is accessing their credit reports.
CICs receive a huge amount of data from various credit institutions, and customers have reported that CICs take a long time to process this data.
In another customer-friendly move, RBI is to set up a centralised public web portal to search unclaimed deposits. Experts believe it will bring more transparency and accountability to the financial system.
“On the regulatory front, the development of a centralised web portal for the public to search unclaimed deposits and grievance redress mechanism is aimed to improve the customer convenience,” says A.K. Goel, chairman of Indian Banks’ Association and MD & CEO of Punjab National Bank.
By addressing these customer concerns, RBI is helping build trust and confidence in the credit reporting system, essential for the healthy functioning of the Indian financial system.