The Reserve Bank of India (RBI) has issued directions for appointment of Internal Ombudsman for all Credit Information Companies – CICs.
Key points
- As announced in the monetary policy statement dated 5th August 2022, all complaints that are partly or wholly rejected by CICs will be reviewed by the Internal Ombudsman before the final decision is conveyed to the complainant.
- The Ombudsman will not entertain any complaints directly from the members of the public.
- RBI has directed CICs to complete the process of appointment of an Internal Ombudsman at the apex of their internal grievance redress mechanism by April 1, 2023.
- RBI has said that every CIC must appoint the Internal Ombudsman for a fixed term of not less than three years, but not exceeding five years.
- The Internal Ombudsman shall be either a retired or a serving officer, not below the rank of Deputy General Manager or equivalent in any financial sector regulatory body with at least seven years of experience in banking, non-banking finance, financial sector regulation or supervision, credit information or consumer protection.
- The Internal Ombudsman shall not attain the age of 70 before completion of the proposed term and there shall be no reappointment for extension of term in the same CIC.
About Credit Information Company (CIC)
- Credit Information Company (CIC) is an independent third-party agency that collects financial data of individuals pertaining to their loans, credit cards and other related information and shares with its members, who generally happen to be banks and other financial institutions.
- RBI grants Certificate of Registration to CICs.
- Currently, there are four CICs — Credit Information Bureau (India) Ltd (CIBIL), Equifax Credit Information Services Pvt Ltd, Experian Credit Information Company of India Pvt Ltd and CRIF High Mark Credit Information Services Pvt Ltd.
- These companies are governed by the Credit Information Companies (Regulation) Act (CICRA) in 2005.
- Section 3, of CIC Act, 2005 clearly prohibits any company from carrying out the business activity of credit information, without having the Certificate of Registration from RBI. Hence it is mandatory to apply and obtain for this certificate from RBI.
- In addition to the business of credit information, a CIC can engage in businesses such as (a) providing credit information to individual and corporate borrowers his/her/its own credit report; (b) providing data management services to the Credit Institutions who are its members.
