RBI has Changed Loan Rule: The Reserve Bank of India (RBI) has changed the rules for personal loans and has made it more stringent than before.
After this, it may be challenging for individuals who wish to take multiple personal loans simultaneously in the new year. Time till January 1 was given to implement the new directive issued in August and now it has come into effect.
What changes did RBI make?
According to a TOI report, the updated regulation now requires lenders to report borrower activity to credit bureaus every 15 days, as against a one-month interval earlier. More frequent updating of records will cause borrowers to face greater scrutiny, reducing the likelihood of taking multiple loans at once. RBI said shortening the reporting cycle will improve lenders’ ability to assess borrower risk.
Get more accurate and timely data
Sachin Seth, chairman of credit information company CRIF High Mark, said, “Equated monthly installments (EMIs) fall on different dates throughout the month. Reporting data once a month can delay updates on defaults or repayments by up to 40 days, leading to outdated information for credit assessment. Switching to a 15-day reporting cycle will reduce these delays significantly. Lenders will now have access to more accurate and timely data.”
It will help in curbing excessive borrowing
SBI chairman C.S. Setty, in an interview to TOI, spoke on the issue of new borrowers taking loans from multiple lenders, often beyond their repayment capacity. He said SBI has suggested more frequent updates to provide a clear picture of borrower behaviour. “This move will help curb excessive borrowing by individuals,” he said.
Sachin Seth also said that borrowers taking multiple loans on different due dates will now see their financial activity in the system within two weeks. This reduces the ‘blind spot’ where important credit data may not be visible, enabling lenders to make more informed decisions.
