The Reserve Bank of India (RBI) has announced a significant change in credit reporting procedures. Starting Thursday, lenders will now report borrowers' credit information to credit information companies (CICs) every 15 days, instead of the previous monthly schedule. This new rule aims to provide a more accurate and up-to-date view of borrowers' financial status.

According to the RBI's statement, "The frequency of reporting credit information to CICs has been increased from monthly intervals to a fortnightly basis, or as agreed upon by credit institutions and CICs." This adjustment is expected to ensure that credit reports reflect the most current data.

The RBI believes that this change will benefit both borrowers and lenders. For borrowers, it means that any updates on loan repayments will be processed more quickly. "Borrowers will benefit from faster updates, especially when loans are repaid," the RBI noted. Lenders, on the other hand, will have more accurate information to assess credit risk and reduce the chances of borrowers becoming over-leveraged.

Previously, if a customer took out loans from multiple lenders, the information would only be updated in the credit bureau after 30 days. With the new 15-day reporting cycle, creditors will have more timely insights into borrowers' accounts. Vishal Sharma, Co-founder of AdvaRisk, explained, "Reducing the timeline to 15 days will help creditors monitor accounts more effectively, leading to quicker risk assessments and better lending decisions, ultimately contributing to the economy's health."

Experts agree that this move will enhance the credit tracking system, improve decision-making, and strengthen risk monitoring. Rajesh Kumar, MD & CEO of TransUnion CIBIL, said, "With more frequent data reporting, CICs can update credit records faster, leading to better-informed lending decisions and quicker resolution of consumer disputes."

Akshay Mehrotra, Co-founder of Fibe, added, "For lenders, precise credit risk assessment is crucial for reducing defaults. Borrowers will also benefit from keeping a closer eye on their credit scores, helping them manage debt more effectively. The RBI's measures are set to foster a more responsible and sustainable lending and borrowing environment."

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