The Central Government and the Reserve Bank of India (RBI) have issued a major decision and clarified that minimum CIBIL score will not be mandatory for those taking loan from the bank for the first time. Now banks cannot reject loan applications merely on the basis of lack of credit history. This rule will especially be a relief for millions of people who want to take a loan for the first time but their credit record does not exist or their score is low.
under new rules
RBI has instructed banks to accept loan applications after looking at the overall financial behavior of new customers. In this, their income certificate, employment details, bank account transactions etc. will also be taken into consideration. The government has also decided that every person will have the right to get his credit report in electronic format once a year for free. Now credit information companies will not be able to charge more than Rs 100 for this.
Importance of CIBIL Score and Credit Report
CIBIL Score is a three-digit number ranging between 300 to 900 and is based on your credit history. A score above 750 is considered good and increases your chances of getting a loan. However, as per the new rules, loan opportunities will be available even if the score is less than 300, provided there is no flaw in the financial behavior of the applicant.
What do customers have to do?
Customers should pay their EMIs on time, utilize the credit card limit judiciously and avoid applying for unnecessary loans. Also, check your credit report regularly so that any errors can be detected and corrected.
responsibility of banks
Banks will no longer rely only on CIBIL score but will make a holistic and comprehensive assessment of the customers’ financial condition, income-expenditure balance and loan repayment capacity. This will promote transparency in loan distribution and financial inclusion.
expert opinion
Finance experts believe that this change is a concrete reform in the Indian financial sector. This will not only provide easy and wide credit facility to the customers but will also connect the economically weaker sections with the banking system. This will boost financial inclusion and economic development in India.