The Reserve Bank of India, has mandated all scheduled commercial banks to collect and report credit information of individual SHG members to Credit Information Companies (CICs) beginning from 1st July, 2016.
The RBI Committee on Comprehensive Financial Services for Small Businesses and Low Income Households (2014) recommended that the regulator require all loans provided by regulated institutions to be reported to at least one credit bureau. Till recently, only banks and NBFC-MFIs were mandated to do so, leaving out of the ambit non-MFI NBFCs, certain categories of banks, and cooperatives. As there is an urgent need for credit bureaus to tap into all sources of credit information in order to build credit histories of people, the Committee recommended that universal reporting to credit bureaus should be mandated for all loans, both individual and Small and Medium-Sized Enterprises (SMEs), but in particular Self-Help Group (SHG) loans, Kisan Credit Card, and General Credit Card. The need for reliable credit information on SHG borrowers is also echoed in the Report of the Expert Group on Setting Up a Developmental Financial Institution for Women SHGs (2014), and was pointed as well by Ms. Kalpana Pandey, the CEO and MD of CRIF High Mark, one of the credit bureaus.
Taking cognizance of these recommendations, the Reserve Bank of India, in its circular on Credit Information Reporting in Respect of SHG Members, issued on 14th January, 2016, has mandated all scheduled commercial banks including regional rural banks to collect and report credit information of individual SHG members to Credit Information Companies (CICs) beginning from 1st July, 2016. A two-phased implementation approach to the RBI directive has been suggested with emphasis on the quality of data collected and reported. Phase I will commence from 1st July 2016, and phase II from 1st July 2017. The depth of the credit-related information to be collected would increase in phase II. The implementation process will entail separate collection of information for SHG members whose total amount of loan that exists or to be availed: a) exceeds Rs 30,000 and b) is up to Rs 30,000; with the information requirements of the former being more detailed than the latter.