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The Reserve Bank of India has directed regional rural banks to become members of at least one of the credit information companies.
This move comes in the wake of large number of RRBs not becoming members of any credit bureaus despite a specific legal requirement since December 2006.
The law governing credit information companies requires every credit institution to become a member of at least one credit information company.
As RRBs are also credit institutions, they are required to take membership of at least one credit information company.
Currently, India has three main credit information companies--CIBIL, Experian and Equifax.
Welcoming the RBI's latest directive, Sanjay Patel, Managing Director & CEO, Equifax Credit Information Service, said his company was eager to grow in the RRB space.
As for benefits to RRB, Patel said a credit bureau like Equifax can help RRBs in booking better quality assets and managing their existing asset quality.
This can help reduce the NPAs in the segment and also monitor the delinquency among rural customers across lenders, Patel told Businessline.
Credit information companies are already offering their services to banks, NBFCs, co-operative banks, housing finance companies, asset reconstruction companies and micro-finance institutions in the country.
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