The Finance Ministry clarified in Parliament last week that CIBIL scores are not mandatory for loan approvals but serve as one of several tools banks use to assess creditworthiness. Union MoS for Finance, Pankaj Choudhary, explained that CIBIL, along with other credit information companies like Equifax and Experian, is authorized by the RBI to provide credit scores to lenders. These scores help banks evaluate a borrower’s past repayment behavior, loan settlements, and defaults, aiding informed lending decisions.
However, the RBI has not mandated a minimum credit score for loan sanctions; lenders use their discretion based on policies and guidelines. For first-time borrowers without credit history, loans cannot be denied solely for this reason. The fee for accessing one’s credit report is regulated and capped at ₹100, with one free annual report provided.
While the government plans to establish a National Financial Information Registry for comprehensive borrower data, there is no plan to replace CIBIL currently. The RBI has strengthened grievance redressal mechanisms for misuse concerns, requiring CICs to notify customers of credit report access and defaults and to address complaints through internal and RBI ombudsman channels.
