Do you know, now there is a mandatory compensation policy for delay in updation and rectification of your Credit Information Report? If there are any discrepancies in your credit report, and you raise your complaint with the respective credit bureau, they must resolve the complaint within 30 calendar days. Otherwise, as per the RBI compensation framework for CICs and CIs framework, they will be obligated to provide a compensation of Rs. 100 for each day of delay. At this point, many questions may arise in your mind. Why did RBI make these sudden changes? How does this compensation policy work? And most importantly, how can you claim the compensation? Don’t worry, in this article, we have covered all these points briefly, so that you can get a complete understanding about the new guidelines and use them effectively to rectify your credit report.

Background and Rationale:

The main concern of the RBI’s compensation policy is driven by inaccurate data present on borrowers’ credit reports and violations of the CIC Regulation (Act) and CIC Rules by credit bureaus.

After receiving numerous complaints under the RBI Ombudsman Scheme, the RBI conducted a statutory inspection of all the credit bureaus (respectively, TransUnion CIBIL, Experian, Equifax, and CRIF Highmark).

They found that certain data related to credit information maintained by these bureaus was inaccurate and incomplete. Additionally, upon receiving complaints from some borrowers, the bureaus neither updated the correct information on their credit reports nor informed them about the actions taken regarding rectification. In most cases, they failed to resolve the customers’ complaints within the 30-day timeframe.

In view of all this evidence, last year in June 2023, RBI imposed a total penalty of Rs. 1.01 crore on all the four Credit Information Companies. Additionally, they proposed implementing a comprehensive compensation framework to strengthen and improve the grievance redressal mechanism and customer service provided by the credit bureaus. At last, on 26 Oct 2023, RBI published the rules and regulations of the compensation act.

RBI compensation framework for CICs and CIs (Rules and Regulation of the policy):

To understand the RBI’s new compensation framework, it is essential to know how Credit Information Companies (CICs) resolve consumer disputes.

According to the CIC Act 2005, credit bureaus cannot modify any information in an individual’s credit report without getting confirmation from the respective Credit Institution (CI), who reported the particulars to them. Means, when you raise your complaint with credit bureaus, they forward the complaint to credit Institutions, and based on their response, they resolve your complaint within a stipulated time frame.

So, it’s very clear that, if the credit bureau fails to resolve your complaint within 30 days, then the credit bureau (CIC) and credit Institutions (CI), both can be mutually responsible for the same. That’s why, RBI imposed the compensation policy on both, CICs and CIs to eliminate the unnecessary delay.

1. According to the act, the overall time limit is 30 calendar days, where CI will get 21 days and CIC will get the remaining 9 days for the complete resolution of a complaint.

  If a Credit Institution (CI) fails to send updated information to the CICs within 21 calendar days of being informed by a CIC or the complainant, they must compensate the complainant Rs.100 for each day of delay.

  Conversely, if a CIC fails to resolve the complaint within 30 calendar days after being informed by the complainant or CI (where the CI submitted its response within 21 days), the CIC must compensate the complainant.

2. If it’s seen that the CIC and CI both are mutually responsible for the delay in dispute resolution (beyond 30 calendar days), the compensation amount shall be apportioned among the CIC and CIs.

3. In case, the complaint involves inaccurate information provided by more than one CI, the complainant should register their grievance with the concerned CIC. The CIC shall coordinate with all relevant CIs, and revert back the complainant with the comprehensive resolution of the dispute.

4.Throughout the dispute resolution process, the CIC has to inform the complainant about the actions taken on the complaint, including the case where the complaint has been rejected. In case of rejection, the reason for rejection must be provided by them.

5. If there is a delay in dispute resolution by either the CIs or the CIC, both must communicate internally and inform the complainant after final resolution, regarding the total delay and the compensation amount to be paid by the concerned CIC or CIs within 5 working days.

6.The date of grievance resolution is considered to be the date when the CIC sends an updated report to the complainant’s postal address or email ID provided by the complainant.

Apportionment of compensation between Credit Bureaus and Credit Institute: 

As we have discussed earlier, credit institutes have maximum21 days and credit bureaus have remaining 9 days for the complete resolution of a complaint (within 30 calendar days from the date of receipt).

Here, we have tried to illustrate the apportionment of compensation between CI and CIC in different scenarios.

Case1:

• Let’s consider, a complaint is registered with CIC on 1st January 2024. As per the CIC Act 2005, the complaint should be resolved within 30 calendar days, i.e. on 31 January 2024.
• CIC forwarded the complaint to CI (e.g. Bank A) on 5th January 2024.
• Suppose, Bank A provides their confirmation to the CIC on 28 January 2024. (Where the 21st day would be January 26, 2022) – 2 days delay by Bank A.
• If CIC resolves the dispute and shares a rectified credit report with the complainant on 3rd February 2024- 1 day delay by CIC.

Here, a total compensation of Rs. 300 (Rs. 200 by Bank A and Rs. 100 by CIC)shall be provided to the complainant for delay of 3 days beyond the permissible time.

Case2:

• Let’s consider, an individual has issues on three different loans in his credit report. He registered a complaint with the concerned CIC on 1st January 2024.
• The CIC seeks confirmation from Bank A, Bank B, and Bank C on 5th January 2024.
• Bank A provides their version on 26th January 2024. – No delay by Bank A.
• Bank B confirms CIC on 31 January 2024. – 5 days delay by Bank B.
• Bank C confirms CIC on 2 February 2024. – 7 days delay by Bank C.
• Now, if the concerned CIC resolves the complaint on 2nd February 2024. – No extra delay by CIC.

In the above-mentioned case, the total overall delay is 2 days, therefore the total compensation of Rs. 200 will be apportioned between the defaulting banks. (i.c. Bank B & Bank C). Cumulatively, the delay of all the defaulting banks put together is 12 days (5+7 days).

Bank A = No compensation 

Bank B = (5*200)/12 = ₹ 83.33

Bank C= (7*200)/12 = ₹ 116.66

CIC= No compensation 

When the compensation framework is set to become effective and how can you claim the compensation?

RBI published the circular on 26 Oct 2023, and as per their instructions, all the credit bureaus (TransUnion CIBIL, Experian, CRIF Highmark, Equifax) already implemented the compensation policy from May 2024 onwards.

Recently, you may have noticed a special addition to their online dispute forms, where you have to provide your current/savings account details to claim the compensated amount (if applicable).

It is important to remember that the responsibility of providing accurate account details lies solely with you; CICs will not be responsible for any incorrect account information.

For delay in dispute resolution, the compensation amount shall be credited in your bank account within 5 working days. In case, any wrongful denial of compensation by CICs or CIs, you can approach RBI, under the RBI Ombudsman Scheme, 2021.

In special cases of wrongful denial of compensation by CIs not covered under the RBI Integrated Ombudsman Scheme, 2021, you can approach the Consumer Education and Protection Cell (CEPC) operating from the Regional Offices (ROs) of the Reserve Bank of India.

In which cases the compensation policy shall not be applicable?

1. The compensation framework will not be applicable, if your complaint is related to the computation of credit score or credit scoring model of the CICs.
2. RBI compensation framework for CICs and CIs will not be applicable, if your dispute is already settled by RBI under the Arbitration and Conciliation Act, 1996.
3. If your complaint is against any internal administration (human resource, staff) or any kind of suggestion or commercial decision of the CIC/CI.
4. If your complaint has already been decided or pending in any other forum such as the Consumer Dispute Redressal Commission, Courts, Tribunals, etc.

How will a consumer get benefited under regulatory changes by the compensation policy?

“100 rupees for each day of delay” may sound very little, but the compensation policy is not just about the money. The main aim of this policy is to safeguard the rights and interests of a common borrower.

So that, credit bureaus and credit institutes both can understand a customer’s urgency, and resolve their dispute promptly. 

Now, CICs and CIs both have a set of clear and strong guidelines to enhance their transparency and efficiency within the credit reporting ecosystem. Overall, these regulatory changes contribute to a more customer-centric and trustworthy credit information environment. And that’s all about the RBI compensation framework for CICs and CIs.

Read more:

• How to file a complaint RBI against CIBIL?
• How to rectify CIBIL report?