Delayed Credit Score Correction? RBI’s Compensation Framework Explained

Your credit score is a very important parameter that indicates your creditworthiness and helps lenders assess your intent to repay the loan. While a high credit score closer to 900 can help get your credit application approved and at relatively favourable terms, the chances of accessing credit start shrinking significantly the farther you move from 900. The onus of maintaining a high credit score lies completely with the borrower, and a disciplined financial behaviour can help maintain it.

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In many instances, incorrect information in your credit report can lead to a drop in your credit score and should be rectified at the earliest to ensure you stay eligible for the best credit offers when you need them. Certain errors, such as inaccurate overdue status, incorrect account information, or delayed loan closure updates, have the potential to damage a borrower’s creditworthiness significantly.

In such cases, you can raise a grievance with the credit bureau, such as CIBIL, to rectify the errors and reinstate the actual credit score. However, these requests often got delayed, causing serious problems to borrowers who intended to take loans in the near future. Thus, RBI introduced a compensation framework to strengthen the consumer grievance redressal mechanism and limit delays in error rectification.

What is RBI’s Credit Information Compensation Framework?

RBI’s Credit Information Compensation Framework makes an applicant eligible for monetary compensation in case the error rectification is not carried out within a stipulated timeline.

Credit Institutions (CIs), such as banks, NBFCs, HFCs, etc. and Credit Information Companies (CICs), such as CIBIL, Experian, Equifax and CRIF High Mark, have to resolve the issue or compensate the applicant for each day of delay.

In case a grievance related to your credit information is not resolved within 30 calendar days from the date of complaint filing, you become liable for the compensation of Rs. 100 per calendar day of delay.

RBI’s Official Document - Framework for Compensation to Customers for Delayed Updation/ Rectification of Credit Information

How Does the Compensation Timeline Work?

Let us understand how this compensation timeline works with the help of the table below:

Day 1	Day of registration of the Grievance with the lender or the credit bureau
Within 30 days	The complaint should be resolved by the concerned entity
After 30 days	The complainant becomes eligible for Rs. 100 per day of delay till the resolution is provided

In case a grievance takes 45 days to get resolved, you can apply for compensation for the 15-day delay, amounting to Rs. 1,500.

Here, it is pertinent to understand that CIs and CICs collectively get a timeline of 30 calendar days to resolve a grievance. Additionally, the Credit Institution (CI) has to forward the corrected data within 21 days of receiving the request. It means that CICs get effectively 9 calendar days to provide the resolution to the complainant.

Responsibilities of Banks/NBFCs and Credit Bureaus

Credit Institutions (Banks/NBFCs)

Once the complaint is registered, the concerned lender (bank/NBFC) has to verify and update the correct information.
This information has to be sent to the Credit Information Companies within the prescribed timeline without fail.

Credit Information Companies

Once the updated information is received, the CIC has to update its records.
The CIC has to generate a fresh credit score based on the updated information.
The correct information, along with the updated credit report, has to be shared with the complainant before the deadline ends.

Read in Detail: Credit Information Companies (CICs) in India

Important Points Related to RBI’s Compensation Framework

The receiver of the complaint, the CIC/CI has to coordinate with the concerned counterpart regarding the delay, the amount payable to the complainant, and who holds the liability for the payment.
In case the credit institution fails to provide the information within its stipulated timeframe, the CI becomes liable to pay the compensation amount.
If the CI provides the required information within 21 calendar days, and the CIC (credit bureau) fails to provide the resolution to the complainant within the timeframe, the compensation liability shifts to the CIC.
The CIC has to coordinate and provide the resolution within the stipulated timeframe in case the complaint involves multiple CIs.
The complainant has to provide basic details such as contact details, email ID, and bank account details/ Unified Payment Interface (UPI) ID for crediting the compensation amount at the time of filing the complaint.
The compensation amount has to be deposited in the complainant’s bank account within 5 working days of the resolution of the complaint.
In case of wrongful denial of the compensation, the complainant can file a grievance to the RBI Ombudsman under the Reserve Bank - Integrated Ombudsman Scheme, 2021.