Brief notes on Credit Information (Companies Regulation Act), 2005

Credit Information (Companies Regulation Act), 2005 is a law approved by the Indian Government in the year 2005. This law or legislation was created for regulating the activities of Credit Information Companies in India. The Credit Information Companies Act in India was regulated for making the issuing of credits smooth and systematic all over India and also subjects relating to it. This part of the legislation is a bit complex and has multiple provisions that are available in the form of statute or bare act of the said Act. 

CIBIL and CIBL reports

The full form of the CIBIL report is Credit Information Bureau (India) Limited. It is one of The Credit Information Companies which is involved in keeping the documentation of every credit-related action of individuals and companies, also counting the loans and credit cards. To CIBIL the different financial institutions and the member banks which are registered gradually submit their individual information. CIBIL provides CIR (Credit Information Report) and the credit scores are provided to the candidates and respective financial institutions grounded on the statistics which are issued by the financial institutions and member banks. The reports on CIBIL accommodate the information in detail about the credits individual is taking. The credits like a car loans, credit cards, home loans, overdraft facilities, personal loans, etc. The CIBIL report also mentions the refunding of the money that is taken by the individual for some time.

Two types of CIBIL reports are available, these are –

• CIBIL Report on Company Credit – The history of a company for the credit payment that is contained in a Company Credit Report of CIBIL, which is combined and formed from the documentation that is issued by several credit institutions. The motive of a report of company credit is to benefit the financial institutions to create notified credit decisions, both objectively and quickly.
• Credit Information Report – It is a type of CIBIL report that is created for individuals and contains in-depth information about the credit behavior in past and a score of CIBIL.

The components that are included in a CIBIL Report are –

• Personal Information
• CIBIL Score
• Contact Information
• Account Information
• Employment Information
• Inquiry Information

Membership of Credit Information Companies (CICs)

At present, there are four CICs, by RBI they are provided with Certificate of Registration. These CICs are Equifax Credit Information Services Private Limited, CRIF High Mark Credit Information Services Private Limited, Credit Information Bureau (India) Limited, and Experian Credit Information Company of India Private Limited. Each Credit Institution must be a member of one of The Credit Information Companies under Section 15 of Credit Information (Companies Regulation Act), 2005. Obtaining information about credit from its members is only specified by The Credit Information Companies Regulation (CICRA) under section 17. When a specific user as defined in Credit Information Companies Regulations, 2006 from a CIC information on credit is obtained from the borrower, therefore there is only that information provided by the members of The Credit Information Companies. Under section 11 of the Credit Information Companies Regulation Act, 2005, RBI explained that it is convenient and necessary in the interest of the public, with this directs between three months from the date of the directive that becoming members of The Credit Information Companies is very much essential for all the Credit Institutions. The responsibility of The Credit Information Companies is to keep the record of individuals with them regularly. For CICs there is one-time membership charged for CIs for becoming members must not be exceeding Rs. 10,000 and annual charges should be below Rs. 5000.

Conclusion

It is to conclude that CIBIL provides CIR (Credit Information Report) and the credit scores are provided to the candidates and respective financial institutions grounded on the statistics which are issued by the financial institutions and member banks. Each Credit Institution must be a member of one of The Credit Information Companies under Section 15 of Credit Information (Companies Regulation Act), 2005.