RBI: In the event that a complaint is not resolved within 30 calendar days of the date of the initial filing with a Credit Institution (CI) or a Credit Information Company (CIC), the Reserve Bank of India (RBI) announced new rules on Thursday that entitle complainants to compensation of Rs 100 per calendar day. All banks, non-bank financial businesses (NBFCs), financial institutions, asset reconstruction firms, and credit information firms have received the circular.
Introduction of the RBI’s Compensation Mechanism
According to the RBI circular, in the event that credit institutions and credit information companies (CICs) fail to update or correct credit information on time, a compensation mechanism will be implemented. The Reserve Bank has instructed credit institutions and credit information firms to put in place the compensation structure for delayed updating or rectification of credit information. The Reserve Bank is exercising the authority granted to it by the Credit Information firms (Regulation) Act, 2005.
RBI has mentioned the parameters stated below
- If a complaint is not handled within 30 days of the complainant first registering the complaint with a credit institution or credit information firm, the complainant will be entitled to compensation of Rs 100 per day.
- If, within 21 days of being notified by the complainant or a credit information company, a credit institution does not provide updated credit information to the credit information company, it will compensate the complainant by making the necessary corrections or additions.
- Even though the credit institution provided the updated credit information to the credit information company within 21 days of being notified by the complainant or the credit information company, the credit information company is still required to compensate the complainant if it is unable to resolve the complaint within 30 days of receiving notification from the complainant or the credit institution.
- In every situation, including those in which the complaint is denied, the credit institution or credit information firm will notify the complainant of the steps taken in response to the complaint. In the event of a rejection, the credit information firm and credit institution must also explain the grounds for the denial.
- The amount of compensation that the credit information companies/credit institutions will give the complainant (in the event that the complaint is not resolved within 30 days of filing) will be distributed proportionately among the credit information companies/credit institutions in question.
- The complainant must file a complaint with the relevant credit information firm if the grievance/complaint involves erroneous credit information given by multiple credit institutions. In order to provide the complainant with a thorough grievance resolution, the CIC will coordinate with all relevant credit institutions.
- When a credit information company receives and registers a complaint and the complaint resolution process takes longer than expected, the credit information company will notify the complainant and the credit institutions involved about the total delay (measured in calendar days) and the compensation that the credit institutions and/or credit information company will be required to pay following the final resolution.
- When a credit institution receives and registers a complaint and the complaint resolution process takes longer than expected, the credit institution is required to notify the complainant and the credit information company involved about the total delay (measured in calendar days) and the compensation that the credit institution and/or credit information company will be paying after the complaint is resolved.
- The day the corrected Credit Information Report (CIR) is issued by the credit information provider or credit institution to the postal address or email address the complaint provided will be considered the grievance resolution date.
- In order to allow the complainant to submit their contact information, email address, bank account information, and Unified Payment Interface (UPI) ID for the purpose of crediting the compensation amount, credit information companies and credit institutions must include the necessary provisions in their complaint submission format (both online and offline). The complainant has the responsibility of supplying accurate details; credit information firms and credit institutions will not be held liable for any inaccurate information submitted by the complainant.
- After the complaint is resolved, the compensation money will be credited to the complainant’s bank account within five business days.
- Under the Reserve Bank – Integrated Ombudsman Scheme, 2021, the complainant may file a complaint with the RBI Ombudsman if credit information firms or credit institutions have wrongfully denied them reimbursement.
- If a complainant believes that credit institutions have wrongfully denied them compensation and are not yet covered by the Reserve Bank – Integrated Ombudsman Scheme, 2021, they can contact the Reserve Bank of India’s Regional Offices (ROs) Consumer Education and Protection Cell (CEPC).
Non-Maintainability: The following situations will not apply to the compensation structure:-
- Disputes for which CICRA, 2005, Section 18 provides a remedy.
- Complaints and references on (a) internal management, (b) human resources, (c) employee compensation and benefits, and (d) references that pertain to recommendations and business choices made by the credit information company (CI).
- Complaints about disagreements or complaints about how the credit score or credit score model was calculated.
- Complaints that have been resolved by other forums, such as the Consumer Disputes Redressal Commission, courts, tribunals, etc., or that are now pending there.
Implementation of the Compensation Mechanism
The compensation mechanism will take effect in six months in accordance with the circular. Within the next six months, the credit information businesses and credit institutions were instructed to set up the systems and procedures required to implement the compensation structure. The Reserve Bank of India (RBI) issued a strong statement stating that credit information providers and credit institutions who disobey or disregard these directives will face penalties under the CICRA, 2005.