Consumer Demand Credit Report Now

We have been alerted by Banking Sources that the Reserve Bank of India via notification - DBOD.No.DL.BC. 138/20.16.042/2008-09 has granted access to Consumer Credit Report which banks obtain from CIBIL at a nominal charge of Rs 50 Max.

The RBI Notification said,

the provisions of sub section (1) of Section 21 of the Credit Information Companies (Regulation) Act, 2005, which provides “any person, who applies for grant or sanction of credit facility, from any credit institution, may request such institution to furnish him a copy of the credit information obtained by such institution from the credit information company”. Further, sub-section (2) of the said Section also specifies that every credit institution shall on receipt of request, as indicated in sub-section (1), shall furnish to such person a copy of the credit information subject to payment of charges specified by the Reserve Bank under the Regulations.

So the next time if you apply for a personal / home loan and curious to see what is their in your credit report, print the following notification of RBI and draft a letter attaching the RBI notification and demand to see your credit report.

RBI has strictly warned the banks to comply with its orders.

Appeal against Bank for Not Clearing CIBIL Entry

CIBIL is a great initiative, but it is not uncommon to see names of borrowers who have cleared all their dues in the CIBIL database. Here is a case study of a winner.

Mr. Bijay Kumar Dash applied for a Housing Loan and was turned down due to his name appearing in the CIBIL defaulters list. Mr. Dash had availed Citibank credit card and had defaulted on payment which he subsequently paid-off and cleared all the dues. However, Citibank failed in its primary duty to get Mr. Dash's name off the CIBIL list and hence his housing loan was rejected.

Mr. Dash appealed with the Delhi Consumer Forum and Won the case against Citibank. The forum also ordered Citibank to pay Mr. Dash a sum of Rs 50,000 as compensation for damaging his reputation as a borrower and also ordered that the bank must immediately clear his name from the CIBIL list.

So if you have fully paid up all your credit card and personal loan dues and your name still exists in the CIBIL list, take refrence of this case and run to the nearest consumer court and you will liekly win the case and compensation too :-)

Experian + EquiFax + Highmark Credit Rating Agencies in India

The RBI has granted license to establish 3 more credit rating agencies on the lines of CIBIL. Global credit rating provider Experian and Equifax along with a startup - Highmark have been granted licenses to operate in India.

These rating agencies will rate the credit worthiness of entities from Individuals, Firms, Companies etc. They are different from CRISIL and ICRA who have established themselves as brand names for rating corporate instruments.

For individuals requiring home / personal/ vehicle loans, credit cards, etc their credit history will be verified from any of the above mentioned 4 institutions before sanctioning of the amount. CIBIL is the current market leader in India with 135 million records. CIBIL is not at all consumer friendly as they don't entertain any request for credit report. RBI needs to look into this issue with urgency, in our opinion.

Experian and Equifax already operate in US and UK. It will be interesting to see if they are willing to transfer the credit history of Indians moving from US to India.

India Loses 2.2 mn Credit Cards in 9 Months

The latest data released by RBI suggest that the number of Credit Cards in India havedeclined by 2,2mn. In April 2008, there were 28.3 mn credit cards and in Dec-08, the number has fallen to 26.1mn.

Reasons for Decline in Credit Cards:
The main reason for negative Growth in Credit Cards is the Global Crisis as Banks turned extremely cautious to the situation. Upon expiration of the card, banks didn't renew for some customers and some canceled the cards voluntarily or by force from the banks.

Mr. Sachin Khandelwal, of ICICI Cards said,

None of the issuers have been aggressively marketing cards in the past few months. Credit card norms have been tightened. Issuers have raised the minimum income requirements across the board and also the cut-off scores for issuances on these cards.

Banks have not started canceling dormant cards as customers would like to keep their spend in control and use the card as a means of URGENT Credit only.

Industry observers are of the view that they have entered a consolidation phase where they will want to have GOOD customers with regular usage base. Bad Debts has risen from an average of 6.5% to 9.5% and many banks are now going to raise the interest rates further on overdue accounts.

Insurance companies offer cover for wallets

A group of insurance companies are gearing up to launch insurance products that would insure a person against losses arising from lost wallets.

Tata AIG Life is planning to launch products that would ensure a person against such losses. In addition the insurer would provide insurance cover for car or apartment, identity theft and purchase protection.

Bharti AXA General Insurance, Iffco Tokio General Insurance are some of the other players planning to launch such products.

However under this option the money lost will not be covered and insurance will be restricted to the replacement cost of a lost or stolen wallet, personal papers and the credit and debit cards in the wallet.

Besides, no, tickets coverage will be offered for cheques or fraudulent charges on the lost or stolen cards and any other identity theft-related costs.

There is another form of Card protection especially meant for Credit and Debit Cards. I am gathering information on the same and shall write a post ASAP.

RBI measures for Fraud Prevention

The Central Bank has finally woken up and has recommended measures to prevent Credit Card Frauds or at least minimize the same. RBI has recommended the following measures to be taken by every credit card issuer,

• Mandatory SMS facility for Online Transactions over Rs 5,000 [ However, some banks like ICICI are sending the SMS for every Online Transaction and it is a good move in our opinion]
• Separate Password protection for all Online Transaction. Your CVV is not enough, the hacker will need a password as well. [ Recall we have already written about this feature w.r.t HDFC Bank Cards - MasterCard SecureCode for Online Transactions ]
• Secured Transaction mechanism for customers doing business on IVR - Interactive Voice Response Systems

All these measures have to be fully implemented by each and every credit card company operational in India under the guidelines of RBI.