RBI Proposes Faster Credit Reporting: What It Means for Borrowers
The Reserve Bank of India (RBI) has proposed major reforms to the credit reporting system, making it faster, more accurate and more borrower-friendly.
At present, corrections or EMI updates in credit reports often take several weeks, which can cause:
- Delays in loan approvals even after dues are cleared
- Rejections due to old negative entries
- Difficulty in getting better interest rates despite timely payments
Under the new system:
- Errors must be rectified within a shorter window
- EMI repayments will reflect in credit reports within 7 days
- Borrowers using credit-score–based pricing can get faster approvals and cheaper loans
Penalties for Incorrect or Delayed Reporting
For the first time, RBI has proposed financial penalties for:
- Incorrect credit reporting
- Delayed updating of borrower information
- Retention of outdated or wrong data in credit files
This is a major relief for borrowers who have long suffered because of:
- Loan rejections caused by incorrect entries
- Higher interest rates due to old defaults not being removed
Impact on Credit Availability & Lending
RBI’s draft rules aim to create a credit ecosystem that is:
- More efficient for lenders
- More transparent for borrowers
- More accurate in assessing borrower risk
With timely reporting:
- Lenders can better judge creditworthiness
- Borrowers get faster updating of EMIs in their credit history
- Issues caused by stale or outdated data reduce sharply
What Happens When a Borrower Misses an EMI?
When a borrower does not pay EMI on or before the due date, banks follow a strict reporting process under credit bureau guidelines.
Here’s how it impacts the borrower and how CIBIL gets updated:
1. First 30 Days: “Days Past Due (DPD)” Starts
The moment you miss an EMI, your account is marked as:
- DPD 1 on the next day
- DPD continues increasing daily until the EMI is paid
Impact:
Even a 1–5 day delay may not show immediately in CIBIL, but banks record it internally.
2. 30+ Days Delay: Reported as a Missed Payment
If the EMI is not paid for 30 days, the bank reports it to CIBIL in the next monthly cycle as:
- 30 DPD (payment overdue by 30 days)
Impact:
- Your CIBIL score drops 60–100 points
- Your future loan interest rates increase
3. 60–90 Days Delay: Loan Becomes Highly Risky
Banks update your CIBIL status as:
- 60 DPD
- 90 DPD
Impact:
- Major score damage that lasts for years
- New loans become nearly impossible
4. 90+ Days Delay: Account Turns NPA
If the borrower doesn’t pay for 90 days:
- The loan becomes a Non-Performing Asset (NPA)
- Bank must legally report this to all credit bureaus
Impact:
- Your CIBIL score may fall below 600
- Banks stop granting any new credit
- Recovery action and legal notices may begin
5. After Payment: When CIBIL Gets Updated
Under the new RBI proposal:
- After you pay the missed EMI, banks must update CIBIL within 7 days
- Earlier, updates took 30–45 days
Borrower benefit:
Your score starts improving much faster, helping you qualify for new loans sooner.
Always pay before the due date or activate auto-debit to avoid long-term credit score damage.
Conclusion
RBI’s new credit-reporting reforms aim to make the system fairer, faster and more accurate.
Borrowers will benefit from quicker score improvements, while lenders will get real-time data for better decision-making.
However, missing EMIs remains highly damaging — and under the new system, negative updates will hit your CIBIL much faster than before.
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