Along with the festive season, if you are thinking of taking a bank loan for the first time and is worried that you do not have a CIBIL score, then this news is relieved for you. Now people without credit history will also be able to take loans from banks or NBFCs (non-banking financial institutions). The government has made it clear that the minimum CIBIL score will not be compulsory for those taking loans for the first time. That is, now the loan will not be rejected only on the basis of score.
Government responded in Parliament
During the recent monsoon session in the Lok Sabha, Minister of State for Finance Pankaj Chaudhary informed that according to the instructions of the Reserve Bank of India (RBI), banks or other lenders cannot reject anyone’s loan application only on the basis of low or zero CIBIL score. Chaudhary said that in the master direction issued by RBI on 6 January 2025, it has also been clarified that no customer should be denied loan due to lack of credit history.
Confirmation will be necessary
The government has definitely said that the CIBIL score is not necessary, but this does not mean that there will be no investigation. Banks have been instructed to completely examine the background of every customer. In this, information will be seen on the previous payment behavior of the loan application, no old debt, delay in payment, settlement or restructured loan and closed accounts. This process is called du diligation, which is necessary before every loan.
What is CIBIL score?
The CIBIL score is a three -digit number which shows your credit qualification i.e. the ability to repay the loan. This score is between 300 and 900 and the more score, the better your credibility is considered. This score is prepared by CIBIL (Credit Information Bureau India Limited), which is one of the country’s major credit information agencies. Banks and financial companies guess your financial responsibility by looking at this score before sanctioning loans.
Loan will be available even if there is no score
The government has made it clear that RBI has not fixed any minimum score. That is, if a person’s score is 600 or 0, there will be no decision only on the basis of that. The banks will now decide whether to give a loan to give a loan before giving the loan. The CIBIL report will now be just a supporting document, not the basis of the final decision.
No more fees will be recovered
Many times people complain that a hefty amount is taken from them to extract the CIBIL report. The government has also clarified the situation on this. The minister said that no credit information company (CIC) can charge more than ₹ 100 fee. Apart from this, RBI has also directed that every person should be given their entire credit report once a year in electronic format for free. This rule is applicable from 1 September 2016.