More entities can tap into info with Credit Information Companies

More entities will become eligible to tap into information with Credit Information Companies (CICs), going by the eligibility criteria prescribed by the Reserve Bank of India for entities to be categorised as specified users of CICs.

This comes at a time when digital lending, including lending through online platforms and mobile apps, and neo-banks are gaining ground.

A company incorporated in India or a Statutory Corporation established in India, having a net worth of at least ₹2 crore, will be eligible to be categorised as Specified User of Credit Information Companies (CICs), according to the RBI.

Besides, the governing statute of the Statutory Corporation or Memorandum of Association of the Company, as the case may be, should allow the business/activity of processing of information for the support or benefit of credit institutions.

Also read: SFBs expected to register marginal improvement in AUM growth rate in FY22: ICRA

“In the case of a company, it shall be owned and controlled by resident Indian citizens/Indian company owned and controlled by resident Indian citizens,” per the criteria.

Ownership of the firm

The central bank said the ownership of the company shall be well-diversified. However, this condition shall not apply to the holding of shares or voting rights by the Central Government/State Government/Central or State PSUs.

In the case of a company, it shall have not less than three years of experience in running the business/activity of processing information for the support or benefit of credit institutions and shall have a clean track record.

The RBI said the entity should have a certification from CISA certified auditor that it has a robust and secure information technology system in place for preserving and protecting the data relating to the credit information as per the provision of the Credit Information Companies (Regulation) Act, 2005 and Rules and Regulations framed thereunder and any other applicable Regulations, Guidelines in this regard.

The company, nor its promoter (s), or any director(s) of the company should not have at any time in the past been convicted of any offence involving moral turpitude or any economic offence.

Entities meeting the above-mentioned criteria can apply to CICs for obtaining the membership of CICs as a specified user.

Hitherto, specified users included insurance companies; companies providing cellular/phone services; credit rating agencies; brokers registered with Securities and Exchange Board of India; a trading member registered with a recognised Commodity Exchange; Securities and Exchange Board of India; and Insurance Regulatory and Development Authority.

Four CICs

Currently, there are four CICs — Credit Information Bureau (India) Ltd (CIBIL), Equifax Credit Information Services Pvt Ltd, Experian Credit Information Company of India Pvt Ltd and CRIF High Mark Credit Information Services Pvt Ltd. These companies are governed by the Credit Information Companies (Regulation) Act (CICRA) in 2005.

In addition to the business of credit information, a CIC can engage in businesses such as (a) providing credit information to individual and corporate borrowers his/her/its own credit report; (b) providing data management services to the Credit Institutions who are its members.

CIC can also collect, process, collate and disseminate data/information related to property mortgaged to credit institutions; (d) collect, process, collate and disseminate data/ information related to investments made in Securities other than those issued by Central Government; and (e) any other function as notified by the Reserve Bank from time to time.

COMMENT NOW