Hyderabad: The Centre clarified that banks cannot reject loan applications from first-time borrowers only because they lack a CIBIL score. Union Minister of State for Finance Pankaj Chaudhary made the statement in the Lok Sabha during the monsoon session.
Answering a question, Chaudhary said new borrowers have no credit history and banks must consider that fact. He added, “The RBI has issued clear directions to banks and lending institutions not to reject applications solely due to the absence of a credit record.”
RBI has not set a minimum credit score for loans
Chaudhary explained that the Reserve Bank has not fixed any minimum score for sanctioning loans. Banks may take decisions based on their board-approved policies and commercial judgment. The Credit Information Report (CIR) is only one of several factors and cannot be the sole reason to reject applicants without a CIBIL score.
The government stressed that banks should not disburse loans indiscriminately. They must assess repayment capacity, past settlements, write-off records, and overall financial standing before approving credit.
Chaudhary also noted that Credit Information Companies (CICs) can charge a maximum of ₹100 for a credit report. As per an RBI circular issued in 2016, every bureau must also provide one free electronic report to each individual every year.
