Statutory right of the borrower to update the CIBIL score; Credit reporting companies required to consider objections: High Court of Kerala

The High Court of Kerala has ruled that updating the CIBIL score is a statutory right of the borrower and therefore credit rating agencies are legally required to consider objections against the rating assigned to a debtor. . Only one bench of Judge N Nagaresh made this important statement in the case. Sujith Prasad v The Reserve Bank of India et al. The Court noted that credit rating agencies …

The High Court of Kerala has ruled that updating the CIBIL score is a statutory right of the borrower and therefore credit rating agencies are legally bound to consider objections against the rating assigned to a debtor.

A single bench of Judge N Nagaresh made this important statement in the case Sujith Prasad v Reserve Bank of India et al.

The Court noted that credit rating agencies are established and regulated by the Credit Information Companies Act 2005 (Regulation). He referred to Article 21 (3) of the law, which obliges the credit reporting company to update the information by making appropriate additions or deletions at the request of the borrower. .

Since credit scores have civil consequences, affecting a borrower’s financial credibility, credit reporting companies must heed the objections raised by borrowers.

“Considering the fact that the credit score given by credit reporting companies like the 3rd defendant can have serious adverse civil consequences on individuals, the 3rd defendant is required to verify the true situation with his banks / institutions financial members, whenever any anomalies are reported by individuals. The updating of credit information is a statutory right of a borrower or a customer of a credit institution, in view of article 21 (3) of the Law of 2005 “.

The court was considering a motion for brief filed by a lawyer, who was unhappy with the adverse CIBIL reports provided by ICICI Bank Ltd. The Claimant argued that the CIBIL reports had not been updated with the fact that the loan amounts had been cleared.

Credit reporting company Trans Union Cibil Limited told the judiciary that it was only capturing information provided to it by banks. Since it only acts as a simple information custodian, it is not required to verify the accuracy of information provided to it by banks, the company argued.

However, the court ruled that the CIBIL agency is required to verify information on an objection raised by the borrower.

“A credit score is a numerical expression based on an analysis of an individual’s credit history. A credit score is in effect an individual’s creditworthiness. Credit scores are used by lending institutions such as banks. and other financial entities to assess potential past risk in lending money to consumers and to mitigate bad debt loans. By the very nature of the credit score, it has a positive or negative impact on financial credibility of an individual “, the court observed.

The Court noted that the CIBIL company in the present case had forwarded the applicant’s complaints to the bank. However, the bank did not respond to the same.

In view of the borrower’s statutory right to update the CIBIL score, the court ordered ICICI bank to respond to the mail from the CIBIL branch requesting confirmation of the full details of the applicant’s account, within two weeks.

“The 3rd Respondent, upon receipt of this information, should make changes to the Applicant’s credit report if warranted on the basis of the information provided by the 2nd Respondent, without further delay,” the Court ordered in conclusion.

Click here to read / download the judgment


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