RBI, vide circular dated October 10, 2024, has updated applicable guidelines with a view to maintain a track of borrowers' credit history after transfer of loans by banks and non-banking financial companies to Asset Reconstruction Companies ("ARCs"). Some of the key features of the guidelines are as follows:
- ARCs must become members of all Credit Information Companies ("CICs") and submit the requisite data to CICs as per the uniform credit reporting format prescribed by RBI;
- ARCs need to adopt best practices for managing CIC-related activities and have a Standard Operating Procedure ("SOP") in place for handling credit information. The SOP should cover essential procedures such as ensuring that all relevant customer and loan information is submitted to CICs, regularly updating records, and reporting repayments without delays;
- ARCs are required to centralise the issuance of no-objection certificates to avoid issues related to non-updation of repayment data; and
- ARCs must ensure compliance with these guidelines latest by January 1, 2025.
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