Customers of registered credit bureaus can now approach 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 under the central bank’s integrated ombudsman scheme, RBI governor Shaktikanta Das said on Friday while announcing the outcome of the monetary policy review.
“This will provide a cost free alternate redress mechanism to customers of REs (regulated entities) for grievances against CICs," as per the statement on developmental and regulatory policies.
Moneylife has many times received complaints from individual borrowers who have complained of discrepancies in their credit reports issued by credit information companies, which have led to financial setbacks for them such as loan applications being rejected or poor credit score making them ineligible for best interest rates from financial institutions. Now, such borrowers can lodge 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. Moreover, these companies will also now have to put in place an internal Ombudsman framework.
The integrated ombudsman scheme was created by RBI in 2021 to allow consumers to file their 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 (REs).
The scheme covers scheduled commercial banks, including urban cooperative banks, non-banking financial companies (NBFCs) and non-scheduled primary co-operative banks with a deposit size of â‚¹50 crore and above.
The central bank has also mandated the CICs to have their own Internal Ombudsman (IO) framework to strengthen the internal grievance redressal by CICs themselves. This will be over and above the existing customer redressal system that these companies may have.
With regard to outsourcing, the RBI said REs are increasingly using outsourcing as a means for reducing costs as well as for availing expertise not available internally.
Although outsourcing of a permissible activity is an operational decision of REs, it exposes REs to various risks.
The RBI has, from time to time, issued guidelines on managing risks in outsourcing of certain activities by REs.
"In view of the increasing trend of outsourcing, the framework for REs to manage the associated risks needs to be suitably strengthened. Therefore, to harmonise and consolidate the extant guidelines, a draft Master Direction on Managing Risks and Code of Conduct in Outsourcing of Financial Services will be issued shortly for comments from stakeholders,"Mr Das said.