What Is CIBIL And What Are It’s Impacts On Indian Borrowers?

Credit information bureau of India ltd was formed in 2000 by RBI rules and guidelines. It’s main work is to gather and store the information about all the loans and credit cards that a borrower has. This information is stored in a special type of a report called credit information report. The information in credit report is provided to CIBIL by it’s member banks and financial institutions only and it provides this data to its members on request.

Members of credit bureau are all leading nationalized and private banks, financial institutions, non banking financial institutions, housing finance corporations. There are 2 segments on which it maintains and provides the data. A consumer and A commercial. Consumer signifies an individual and commercial refers to a firm. It could be either a Proprietorship or partnership firm or a private limited company.

The main information provided by CIBIL is:

• Personal information like Name, Date Of Birth, Address, Pan number, Passport number, Voters id number and Driving licence number
• Pan number, Address and Date of Incorporation in case of a firm
• Details of all the loans and credit cards availed by the borrower from any of the member banks
• Repayment record of the credit facilities
• Details of all the closed loans and cards
• Number of enquiries made by any member banks to extend a credit facility to the borrower

All this information is not available to every person. Only the member banks who have submitted all its information is allowed to get the information on request. An individual does not have a direct access to his/her CIBIL report.

CIBIL has impacted the Indian borrowers both negatively and positively. Let’s discuss the cream in detail:

• Many people with a good credit report gets extra benefits like; Fast disbursal of the loan, Waiver in processing fees, Low interest rate and bigger sanctions ( big amount).
• Any default made be a borrower gets updated with CIBIL and because of this default they are unable to get any other credit facility. Credit bureau thus has helped India borrowers by forcing them settle their defaults from the banks, if they wish to avail other facilities.

CIBIL has some negative things too:

• Many people complain about update of the wrong information about their accounts in CIBIL because of which they are not able to get any other credit facility from member banks. This is because, all this information is provided by the members and there may be some wrong details that get updated in the system.
• Also, if there is any default in the borrower’s account, it remains in CIBIL for 7 years. So, even if there has been a settlement it does not necessarily get updated in the system.