The Reserve Bank of India (RBI) has directed Credit Information Companies (CICs) and Credit Institutions (CIs) to implement a compensation framework. These guidelines, issued under the Credit Information Companies (Regulation) Act, 2005 (CICRA, 2005), are designed to address delays in the resolution of complaints and inaccurate credit information reporting.
- Compensation for Delayed Complaint Resolution
The framework specifies that complainants are entitled to compensation if their complaint is not resolved within 30 calendar days from the date of filing the complaint with a CI or CIC. Complainants will receive ₹100 per calendar day as compensation for the delay.
The rationale behind this is rooted in Section 21(3) of CICRA, 2005, which requires CICs and CIs to update credit information within 30 days of receiving a request for correction, addition, or any other necessary changes. Rule 20(3)(c) of Credit Information Companies Rules, 2006 further enforces this timeline.
- Responsibility of CIs and CICs
The framework outlines the responsibilities of both CIs and CICs regarding timely updates and complaint resolution. If a CI fails to send updated credit information to CICs within 21 calendar days of being informed by the complainant or a CIC, they must compensate the complainant. Similarly, if a CIC fails to resolve the complaint within 30 calendar days of being informed by the complainant or a CI, despite the CI furnishing the updated credit information within 21 calendar days, the CIC must provide compensation.
Furthermore, both CIs and CICs are required to inform the complainant about the action taken on the complaint, including cases where the complaint is rejected, along with the reasons for rejection.
- Apportioning Compensation
The compensation for delayed resolution beyond 30 calendar days will be apportioned among the relevant CIs and CICs proportionately. This ensures that all parties involved bear their share of responsibility and consequences for the delay.
- Coordination and Resolution
If a grievance involves inaccurate credit information provided by multiple CIs, the complainant should register the complaint with the concerned CIC. The CIC will then coordinate with all the relevant CIs to provide a comprehensive resolution to the complainant.
- Information and Payout
Both CICs and CIs must make provision for complainants to submit their contact details, email ID, and bank account details or Unified Payment Interface (UPI) ID for crediting the compensation amount. It is crucial for complainants to provide accurate information, as institutions will not be held responsible for incorrect details.
The compensation amount must be credited to the complainant’s bank account within five working days of resolving the complaint.
- Recourse for Wrongful Denial
In cases of wrongful denial of compensation by CIs or CICs, complainants have recourse through the RBI Ombudsman under the Reserve Bank – Integrated Ombudsman Scheme, 2021. For CIs not yet covered under this scheme, complainants can approach the Consumer Education and Protection Cell (CEPC) in RBI’s Regional Offices.
- Non-Maintainability of the Compensation Framework
The compensation framework does not apply to disputes for which a remedy is provided under Section 18 of CICRA, 2005, which deals with conciliation or arbitration. It also excludes complaints related to internal administration, human resources, pay and emoluments of staff, and suggestions and commercial decisions of CICs/CIs. Additionally, disputes related to the computation of credit scores or credit score models are not covered, and complaints already decided by or pending in other forums are exempt.
- Implementation and Consequences
The compensation framework will come into effect six months from the date of this circular. CICs and CIs are directed to establish the necessary systems and processes to adhere to the framework within this period. Failure to comply with these guidelines can result in penal actions under the provisions of CICRA, 2005.