If in a dispute over repayment with your lending or credit card-issuing bank, can you be forced to pay up or else face an entry of your refusal in Cibil database? Borrowers must know that loan and credit card repayment details are passed on by banks to a centralised body, Credit Information Bureau India (Cibil). This information — both positive and negative — plays a vital role in determining whether a borrower’s future loan applications get accepted or rejected. As a pointer to a disturbing phenomenon, a senior official at the banking ombudsman says such ‘arm-twisting’ tactics are not unheard of.
A Delhi resident who formally discontinued his credit card in December 2005 and thus refused to pay the annual maintenance fee of Rs 826, says he was harassed by the card-issuing bank since. Not only did the card-issuing bank fail to reverse the charges, it kept levying latepayment fees, which over the years totalled Rs 3,500. In April this year, he received a call from a bank executive willing to settle the bill at Rs 1,000. To top it, the executive threatened that his name would be added to the defaulters’ list if he didn’t pay up. Fortunately, this case was resolved last week. Now, consumers may be relieved to learn that efforts are being made to put a stop to this ‘malpractice’. Steps include finding a systemic solution to the Cibil database update process. Last week, “the annual banking ombudsman conference held in Mumbai invited Cibil to make a presentation on its functioning in the context of customer complaints,’’ says a senior Reserve Bank of India official. Most credit history complaints that reach the ombudsman are over disputed amounts and unchanged status at Cibil despite repayment, says the ombudsman official. In a few cases, credit cards have never been received and yet bills sent across. Then in one case, a bank did not update Cibil records for three years. A Cibil official says, “Sometimes, a borrower would have cleared the payment, but we wouldn’t have received the no-dues information.’’ The ombudsman official seconds that banks are ‘meticulous’ in updating Cibil on negative information, but not in payment update. The official cites that sometimes a listing would carry negative connotation too. The term — written off — is one such. Banks update the credit history of borrowers on a monthly, quarterly and half yearly basis. So, even if a customer were to clear the outstanding amount, the information wouldn’t be added till the next update, says the ombudsman official.
According to a senior banker who does not wish to be identified, currently banks have individual policies on reporting disputed repayment cases to Cibil. “No bank should destroy the credit history (of a borrower) on flimsy grounds, without proper data,’’ the banker insists.
As mentioned earlier in these columns, unlike in developed countries such as US or UK, Indian borrowers cannot individually access this potent information to verify its authenticity. That’s because, according to the Cibil official, the credit bureau is still awaiting guidelines from the Reserve Bank of India to open it up to individuals.
