Millions of loan seekers in India are set to benefit from significant reforms by the Reserve Bank of India (RBI) targeting Credit Information Companies (CICs). These new regulations, slated to take effect from April 1, 2026, aim to rectify arbitrary data practices that have led to widespread loan rejections and financial hardship. The RBI’s move is expected to bring substantial relief to individuals struggling with inaccurate credit scores.
The core of the reform lies in the mandated frequency of credit data updates. CICs will now be required to update borrower information every seven days, a considerable leap from the current monthly updates. This accelerated schedule includes specific update dates: the 7th, 14th, 21st, 28th, and the final day of each month. Furthermore, CICs must furnish previous month’s credit score data to banks by the 3rd of the following month.
This enhanced update frequency has a direct and positive impact on borrowers. The process of correcting errors on credit reports, which previously could take over a month, will now be streamlined to within seven days. This means timely EMI payments made after an update will be reflected promptly, potentially improving credit scores and granting faster access to loans at more favorable interest rates.
The urgency for these changes is underscored by alarming statistics. Approximately 30% of Indian loan applicants are denied credit due to poor credit scores, with reports indicating that half of all applicants have encountered errors in their credit reports. The sheer volume of grievances is evident from the nearly 9.5 lakh complaints filed against CICs between April 2023 and March 2024.
A significant deterrent for CICs is the introduction of new penalties for issuing incorrect credit reports. Previously, there was no mechanism to financially penalize companies for such inaccuracies. This regulatory shift marks a pivotal moment for the Indian loan landscape, offering long-awaited justice to those hampered by outdated information and negligent data management, ultimately freeing their financial futures from the shackles of delayed credit reporting.
