New RBI rule: Getting multiple personal loans set to get tougher
personal loans will face increased scrutiny starting in the new year. A new rule requires lenders to update credit information every 15 days, instead of monthly. This change makes it harder for individuals to qualify for multiple loans simultaneously.
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The Reserve Bank of India (RBI) mandated this change in August, giving lenders until January 1, 2024, to comply. The RBI stated this will improve lenders’ ability to assess borrower risk.
“Equated monthly instalments (EMIs) are scheduled on various dates across the month. A once-a-month reporting cycle could delay reflecting defaults or payments for up to 40 days, resulting in outdated data for credit evaluations. Switching to a 15-day reporting cycle would significantly reduce these delays. More frequent updates allow lenders to capture defaults or payments more accurately and closer to real-time,” said Sachin Seth, chairman at credit information company CRIF High Mark.
SBI chairman C.S. Setty previously highlighted the issue of new borrowers obtaining loans from multiple lenders, sometimes exceeding their repayment capacity. This new rule aims to address this problem. “This is likely to tone down multiple borrowings by the same individual,” he told ToI.
The faster updates will provide lenders with a more current view of a borrower’s financial
