RBI’s New Loan Rules: Major Changes in CIBIL Score and Loan Process

With rising financial needs, more individuals are turning to loans. However, high-interest rates imposed by banks and financial institutions have been a major burden for borrowers. Experts emphasize that maintaining a strong CIBIL score can help secure loans at lower interest rates. To enhance transparency and consumer protection, the Reserve Bank of India (RBI) has introduced new loan regulations effective from January 1, 2025.

Major Changes Under RBI’s New Rules

1. Faster Credit Score Updates

Previously, credit scores were updated every 30 days. Under the new rules, credit agencies must update credit scores every 15 days, ensuring a more accurate reflection of a borrower’s financial status. Additionally, banks must report customer credit information to the Credit Information Company (CIC) on a monthly basis.

2. Notification on Credit Report Checks

Whenever a bank or Non-Banking Financial Company (NBFC) checks a customer’s credit report, they are now required to notify the individual via SMS or email. This step enhances transparency and keeps borrowers informed about their financial status.

3. Clear Reasons for Loan Rejections

If a loan application is denied, the bank must provide a clear reason for the rejection. This empowers borrowers to address financial shortcomings and improve their chances of securing a loan in the future.

4. Free Annual Credit Report

RBI now mandates credit agencies to offer one free credit report per year to consumers. A dedicated link must be provided on their official website, allowing users to access their reports conveniently.

5. Prior Notification Before Declaring Default

Before classifying a customer as a defaulter, banks and financial institutions must send prior notice via SMS or email. Furthermore, every bank must appoint a nodal officer to handle credit-related issues and assist consumers in resolving disputes.

6. Faster Complaint Resolution

If customers face discrepancies or issues with their credit information, they can file a complaint with the Credit Information Company. If the issue remains unresolved for more than 30 days, the company must pay a penalty of ₹100 per day until resolution.

How These Changes Benefit Consumers

These new RBI regulations ensure greater transparency in the lending process, help consumers maintain a strong credit score, and offer better protection against unfair loan practices. By improving financial awareness and accessibility, these reforms empower borrowers and create a more consumer-friendly banking system.