In a significant move aimed at making credit assessments more current and reliable, the Reserve Bank of India (RBI) has instructed all regulated lending institutions to switch to submitting credit information on a weekly basis. This directive, announced on December 4, marks the second acceleration in the reporting timeline within a span of just over a year.
From Monthly to Fortnightly to Weekly: The Rapid Evolution
The central bank's latest guidelines represent a decisive step towards real-time credit monitoring. Until August 2024, banks updated credit information only once a month. On August 8, 2024, the RBI first tightened the norms, shifting the cycle from monthly to a fortnightly submission. Now, in its December 4 statement, the regulator has mandated an even faster weekly rhythm.
The RBI justified this change by highlighting the growing dependence of Credit Institutions (CIs) on Credit Information Reports (CIRs) during their loan approval processes. "It is imperative that the CIRs provided by Credit Information Companies (CICs) reflect more recent information," the central bank stated. The new system is designed to ensure that lenders have access to the most up-to-date data on a borrower's financial commitments before making a lending decision.
Breaking Down the New Weekly Reporting Rules
The finalized guidelines provide a clear framework for banks and other financial entities. The RBI has issued a total of 10 separate amendment directions, tailored for different sets of institutions including commercial banks, small finance banks, NBFCs, and credit information companies themselves.
The core of the new reporting schedule is as follows:
- Banks must submit incremental credit information updates to CICs on the 9th, 16th, 23rd, and the last day of every month.
- These incremental updates, containing only new or changed data since the last report, must be furnished to the credit bureaus within four calendar days of the specified dates.
- Additionally, by the 5th day of the following month, banks are required to submit a complete 'full file'. This comprehensive file must include records of all active accounts as of the month's end, as well as accounts where the borrower-bank relationship has ended since the last reporting date.
The Path to Finalization: From Draft to Directive
This policy shift did not happen overnight. The RBI had first floated draft directions on September 29, inviting feedback from stakeholders and the public. After examining the received comments, the regulator incorporated relevant suggestions before finalizing the instructions that are now binding.
The move to weekly reporting is coupled with measures intended to facilitate faster data submission and more efficient error correction processes. This is expected to enhance the overall accuracy and timeliness of the credit ecosystem in India.
For borrowers, this change means their credit behavior—be it a loan repayment, a new credit card utilization, or closing an old account—will be reflected in their credit report much faster than before. This can have immediate implications for individuals seeking new loans, as lenders will be assessing a more recent financial snapshot.
