Introduction
On 06.01.2025, the Reserve Bank of India (‘RBI’) issued the Master Direction – Reserve Bank of India (Credit Information Reporting) Directions, 2025 (‘Master Directions’)[i], consolidating and streamlining the instructions previously issued to Reporting Entities (‘REs’) concerning the reporting of credit information. The objective of the Master Directions is to establish a standardized framework for the reporting and dissemination of credit information, ensure confidentiality and security of sensitive credit data, and provide mechanisms for consumer access to credit information along with an effective grievance redressal process for matters related to credit reporting.
The Master Directions are organized into seven chapters, comprehensively addressing the obligations of REs, which include Credit Institutions (‘CIs’) such as banks, financial institutions, Non-Banking Financial Companies (‘NBFCs’), and Credit Information Companies (‘CICs’). Each chapter provides detailed and systematic guidance on various aspects of credit information reporting. A concise analysis of each chapter is set forth below.
Analysis of the Master Directions
Chapter I: Preliminary
This chapter essentially provides for the scope and applicability of the Master Directions. R. 2 specifies that the Directions apply to CIs such as banks, NBFCs, financial institutions, and Asset Reconstruction Companies (‘ARCs’), as well as CICs.
Further, r. 3 defines key terms like ‘Company’ as defined under the Companies Act, 2013 (‘Companies Act’). It also clarifies that CICs are registered under the Credit Information Companies (Regulation) Act, 2005 (‘CICRA’) and that CIs include entities like banks and NBFCs. Any terms not expressly defined in the Directions will adopt their meanings from other relevant laws, such as the Companies Act or CICRA.
Chapter II: Membership
This chapter outlines the membership requirements for CIs with CICs. As per r. 4, all CIs are required to join all CICs registered with the RBI. The membership fees are capped at a one-time payment of Rs. 10,000/- and an annual fee of Rs. 5,000/-. CICs are mandated to conduct due diligence before granting membership to Specified Users (‘SUs’)[ii] and must ensure their compliance with eligibility criteria and operational guidelines through quarterly compliance undertakings.
Chapter III: Credit Information Reporting and Dissemination
This chapter holistically ensures standardization and transparency in credit reporting, safeguarding borrower information while fostering accountability and robust data management practices.
R. 5 mandates that all credit information be submitted in the Uniform Credit Reporting Format (‘UCRF’) divided into Form 1 for consumer data, Form 2 for commercial data, and Form 3 for microfinance data. Under r. 6, CIs are required to update credit information fortnightly (on the 15th and last day of each month) and submit it to CICs within seven days. In cases of rejection, CICs must parameterize rejection reasons and share them with CIs for rectification under r. 7, which mandates rectification and re-submission within seven days.
To ensure data accuracy, r. 8 introduces the Data Quality Index (‘DQI’), which CICs must compute monthly across consumer, commercial, and microfinance segments. CICs must also provide industry benchmarks and take corrective measures if scores decline. Furthermore, r. 9 outlines the requirements for Credit Information Reports (‘CIRs’), which must include details of borrowers, co-borrowers, and guarantors, along with active and closed accounts. Further, disputed information must be reflected appropriately, allowing customers to add comments. It also states that individuals are entitled to one Free Full Credit Report (‘FFCR’) annually.
Additionally, r. 9(2) governs the sharing of credit information with third parties, requiring CICs to ensure due diligence and restrict information usage to the purposes specified by individual consent. Such information must remain stored in India and be subject to annual audits. Errors in CIRs must be corrected by the source CIs as outlined in r. 10, with corrected reports provided free of charge to affected recipients within six months of the original report.
The usage of CIRs in credit appraisal is emphasized in r. 11, making their incorporation into loan policies mandatory. CICs, along with industry bodies, must conduct workshops to encourage proper use. Additionally, r. 12 requires CIs to display borrower information monthly on their websites in a prescribed format, and r. 13 ensures compliance with other relevant RBI guidelines, including those related to credit cards, digital lending, and the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).
Chapter IV: Technical Working Group
This chapter establishes the framework for the Technical Working Group (‘TWG’) and its sub-group. As per r. 14, the TWG is responsible for annually reviewing and recommending reporting format changes and data collection mechanisms. According to r. 15, a Standing Sub-Group of the TWG addresses technical challenges related to credit information reporting. It facilitates resolutions and conducts biannual meetings to support the broader goals of the TWG.
Chapter V: Customer Service and Grievance Redressal
This chapter focuses on improving customer service and grievance redressal mechanisms for credit information reporting. As per r. 16, CICs are required to alert customers whenever their CIRs are accessed or updated. CIs must appoint nodal officers to handle grievances and periodically analyze complaints to improve their processes.
Under r. 17, a framework for customer compensation is established, entitling customers to Rs. 100/- per day for unresolved complaints exceeding 30 days. The framework also clarifies the responsibilities of CIs and CICs in addressing grievances. R. 18 mandates that CICs maintain detailed action logs on complaints and share these with complainants to improve complaint tracking. As per r. 19, both CICs and CIs must comply with the Reserve Bank Integrated Ombudsman Scheme, 2021, for effective dispute resolution. R. 20 mandates that CICs and eligible CIs appoint Internal Ombudsmen to strengthen the grievance redressal mechanism further.
Chapter VI: Best Practices for CIs and CICs
This chapter highlights the adoption of best practices by CIs and CICs. As per r. 21, CIs (other than ARCs) must implement best practices detailed in Annex XIV, with prior approval from their board of directors. R. 22 mandates that CICs develop board-approved policies for consumer grievance redressal and ensure they are accessible to the public by displaying them on their websites.
Chapter VII: Repeal Provisions and Interpretations
This chapter outlines the repeal of existing circulars and provides clarification on the interpretation of the new Directions. R. 23 states that all instructions and guidelines contained in the circulars specified in Annex XVI are repealed. R. 24 clarifies that any approvals or acknowledgements granted under the repealed circulars will be deemed as granted under these Directions. R. 25 specifies that the repealed circulars will remain in force until the implementation of these Directions. R. 26 provides that the RBI may issue clarifications to give effect to these Directions, and any interpretation provided by the RBI will be final and binding. Violation of these Directions will result in penal action under the CICRA, as stated in r. 26. Additionally, these provisions are in addition to and not in derogation of any other existing laws, rules, or regulations.
Conclusion
The issuance of the Master Directions marks a pivotal step in standardizing and enhancing the credit information ecosystem in India. By consolidating existing instructions, the RBI aims to create a robust and transparent framework that promotes data accuracy, security, and accountability among CIs and CICs. The emphasis on structured reporting, periodic updates, and stringent data quality measures ensures that credit information disseminated across the financial ecosystem is both reliable and consistent, benefiting not only the institutions but also individual borrowers. Moreover, the inclusion of mechanisms like the DQI and mandatory incorporation of CIRs in credit assessments fosters better risk management practices and informed decision-making, ultimately contributing to financial stability.
Equally important are the customer service and grievance redressal provisions, which reflect a borrower-centric approach to credit information governance. By mandating timely resolution of complaints, ensuring compensation for delays, and requiring adherence to the Reserve Bank Integrated Ombudsman Scheme, the directions safeguard consumer interests and instil confidence in the credit reporting process. The emphasis on customer alerts, detailed action logs, and the appointment of internal ombudsmen reinforces transparency and accessibility, empowering individuals to actively monitor and manage their credit profiles. These directions collectively underscore the RBI’s commitment to balancing institutional accountability with consumer protection, paving the way for a more inclusive and equitable credit ecosystem in India.
End Notes
[i] Master Direction – Reserve Bank of India (Credit Information Reporting) Directions, 2025; RBI/DoR/2024-25/125; DoR.FIN.REC.No.55/20.16.056/2024-25, dated 06.01.2025.
[ii] Section 2(l) of CIRCA defines ‘Specified Users’ as referring to credit institutions, credit information companies under Section 15(3) of CICRA, and other entities specified by RBI regulations for obtaining credit information.
Authored by Shivam Mishra, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinions.