CIBIL acts as weeding mechanism, that helps identify poor repayment track records. It helps protect lenders from giving credit to people and establishments who are unlikely to repay what is lent. Even if credit is provided, it is done so at a very high rate of interest, thereby ensuring that the bank is able to recover a considerable sum of money even if a default happens some time into the loan tenure.
The truth is today people spend more than our grandparents or parents ever did. Increasing incomes, desire to own a house in one’s early twenties, availability of variety in lifestyle and brand choices, a booming economy, growing number of enterpreneurs, new business establishments etc., are leading to a tremendous amount of money outflow. Money rotation is a key factor in a progressive economy and this means there is a lot of lending. How does one keep a tab on all the credit lent and how does one identify defaulters and refrain from lending to them again and again?
The government of India and RBI got together to bring CIBIL into existence. Currently Banks, Financial Institutions, State Financial Corporations, Non-Banking Financial Companies, Housing Finance Companies and Credit Card Companies are Members of CIBIL.
The idea behind setting up CIBIL is to gather all existing consumer and commercial credit information and pool it in a one point source for reference. As in an individual or commercial establishment could have accounts in several banks and credit from different lending institutions. All such data can be pulled out for a quick reference check on the individual or commercial establishment, seeking loans, to be aware of the repayment track record of the loan seeker and quickly decide on loan eligibility.
CIBIL acts as weeding mechanism, that helps identify poor repayment track records. It helps protect lenders from giving credit to people and establishments who are unlikely to repay what is lent. Even if credit is provided, it is done so at a very high rate of interest, thereby ensuring that the bank is able to recover a considerable sum of money even if a default happens some time into the loan tenure.
On the flip side, if you have an impeccable repayment track record, you can reap benefits from it! Banks provide a lower interest rate for sound credit profiles and these `Credit Information Reports’ can work to your advantage. It also helps lenders and Banks quickly process a loan, without wasting valuable time on research and background check of the loan applicant.
To protect creditors information CIBIL has stringent security measures in place. Only members of CIBIL can access the info and even they can do so only on a requirement basis.
Hi Stacey,
Thanks for dropping by…that is a good count for a blog that has just started… wishing you the very best. As a policy, we don't exchange links. Sorry about that. However will definitely visit your blog and it would be nice if you stop by more often. Thanks.
Hello
Im just getting relocated to New city in Hyderabad…..i want to apply the loan ..even i dont have any default in any ot the bank..my loans and credit cards are rejecting…..Why……so that i want to check the status of my account was updated in cibil……How can i become a member of cibil… Thanks in advance.
Regards
Nafis
CIBIL information also make availble to the individuals, about whom information is shared to the lenders, to know exactly what is his market credibility.
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Im just getting relocated to New city in Hyderabad…..i want to apply the loan ..even i dont have any default in any ot the bank..my loans and credit cards are rejecting…..Why……so that i want to check the status of my account was updated in cibil……How can i become a member of cibil… Thanks in advance.
Regards
basant
Regarding, CIBIL should provide the information to the individuals about the accounts details and other information know what exactly happened ?.who has send the information ? What is basis they file the credit? It is just not only giving to the bank or financial. Off course if any correction either party can be corrected. not just default one time and individual social status can changed time and circumstance it is right to give information to the individual on taking proper ID prof.
CIBIL Inforamtion is a way used by Banks to Blackmail Individuals into paying extra charges that the bank wants to charge. Therefore there should be a method for browwers to protect thier interest. CIBIL does not share the same with the Browwers.
The idea of having a screening based on CIBIL information ( i wish not to use the word rating as in my view CIBIL does not have a system of Rating as yet ) is okay in principle but may not serve the purpose fully well in practical terms, which needs a serious consideration by RBI, being the nodal agency governing functioning of CIBIL.
When Banks reject an application based on information they receive from CIBIL (at their request), the reasons are not made known to the applicant in clear terms. Further CIBIL does not give a clear rating to an individual's credit worthiness unlike the ratings given by other rating agencies ( like CARE, CRISIL, SMERA etc) for fixed deposits and other intended borrowing by corporates. While the two may be different in their purpose,it would be sound if CIBIL too can rate and give a score based on which the lending institution can give a judgement to their decision to offer the individual a loan or credit card if the minimum score by their commitment is met.
Today there is no system in place especially when Banks make unsolicited calls with a promise to offer a loan or a credit card and after the application is made in good trust, they also reject on grounds not so convincing expcept that when pursued with the institution they claim that their decision is based on information receved from CIBIL, nothing more.
CIBIL information while being made available to individuals at a price does not convey any meaning to a common man and he is left without being able to understand what could have gone wrong even though he has never defaulted ever. CIBIL does not record in clear terms the name of the institution which has placed with CIBIL a default remark about a person, which would otherwise enable the individual to take it up for a remedy with the concerned institution if he were not at fault really. Thus the flow of information with CIBIL goes perinially with these errors and the individual pays a price for the same without any recourse to a correction. It is important that RBI takes note that it is an individual's right to know in clear terms the name of the institution/ institutions that has placed a default record of an individual.
not every payment can come under the nature of default especially when the institution can give a transaction a different treatment despite a commitment made otherwise.
Despsite several representations made through the banking Ombudsman in my personal experience, I am of the view that RBI has just done nothing about this important need and I am constrained to share my bitter experiences in dealing with the banks, CIBIL as well the Banking ombudsnman on such matters.
I wish there would be a better and a sensible way these matters would be dealt with.
DEAR SIR,
WE REQUIRE CIBIL TO INCORPORATE TO GIVE THE CREDIT RATING OF LOAN APPLYING PERSON DIRECTLY . THIS WILL HELP THE PERSON WHETHER HE IS DEFAULTER BY OVERSIGHT, LIKE CHEQUE RETURN CHARGES .ETC,.ALSO BEFORE GOING TO THE BANK HE HIMSELF ON CONFIDENT ON GETTING LOAN AND THE REASON FOR REJECTION FROM THE BANK AND CIBIL RATING.
REGARDS,
M.NITHIYANANDAM
MOB:+919448050306
Sirs,
Like in USA or elsewhere, each individual, even when entering employemtnt, the Govt agency does a cradit rating, and perhaps, the individuals are advised of such rating. It would be ideal if CIBIL folloes such practice. If not, on request, and in confidence, they can make this available, even at a nominal fee. The loan seeker can, then make his point strong while applying for loan. and the Insititutions lending, should make it mandatory, for the loan seeker to obtain the credit rating and send it along with his application .
Sirs,
I agree with the observation that the Banking Ombudsmans office in the RBI is not very consumer friendly . Now we see the Banks going into the Adalat function to get their loans and the disputes settled. Why then the Banking Onbudsman? Can they not do this, instead of just doing the Postal Dept line work.
Dear All,
CIBIL is a joker which is used by all banker's to advantage. Government of India , RBI and all regulatory bodies are all dummies who as usual enjoy the blood sucking work's of banks. The CIBIL can post and share any detail about a person without the person's knowledge and this is the fundamental right of this country. I know bank can post any junk which they will say it is ture. I have even written to the PMO website and tuill date no reply on this issue because this nation favour only people with money. Bankers can abuse the customer's to any extent and we can do nothing. so pray to god the no banker has put u in the list nothing else can be done.
I am phoned many a time by many informing their willingness to offer me credit card(s)
I never applied for one at the first instance!
Does this mean my credit score is fine;
For curiosity I never took or applied for a loan in my life time and similarly I don't like to have
a credit card either.