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Those recordings shall be transmitted to the CIC by the relevant bank or other credit institution. That information shall then be used to produce a credit information bulletin which shall be made available to credit institutions for the purpose of accessing a borrower's creditworthiness and standing, repaying its claims and meeting its other liabilities in relation to the credit facilities it has drawn on or has drawn on.
The inaccuracy of a person's information, managed by credit institution and CIC, can have devastating effects and it is therefore essential that precise reports are made. It is therefore important that imprecise information is corrected in accordance with the procedures required by the applicable legislation. Under the Credit Information Companies (Regulations) Act, 2005, credit information companies are regulated and the creditworthiness of individuals is distributed efficiently.
CIC Act 2005 also provides for the operation of CIC, its registry process, the resolution of disputes, data protection policies and the provision of credit information. RBI has also adopted the Credit Information Companies Regulations, 2006, to make it easier for the CIC to function properly. Section 5 of the CIC Act, 2005 speaks about RBI's issuance of a Certificates of Incorporation to a credit information firm to conduct credit information transactions.
RBI is authorised to issue the RBI licence if certain requirements are met. Assuming that no request is denied without giving the possibility to be listened to. Section 6 sheds light on the deletion of the certification of registry for a given business when it is granted:
- discontinues operations with credit information, or does not meet the terms under which the RBI Registrar of Companies Act was obtained, or does not give any instructions given by RBI, or does not file any accounting records or other documentation if so requested by the manager.
If RBI is of the opinion that the Corporation is granted a certain period of grace to fulfil the terms and condition, or if RBI is of the opinion that a default in the cancellation of the instrument of incorporation is disadvantageous and harmful to the interests of the general good, it may terminate the incorporation without giving the Corporation notice.
In addition, RBI must give a society a fair chance to be consulted before it cancels its inscription. Article 15 of the Act provides that the credit institutions shall be members of credit information enterprises. Any credit institutions existing at the beginning of such an act shall become members of a CIC within three and a half years of the beginning of such an act, and any credit institutions existing after the beginning of such an act shall become members of a CIC within three and a half years of the date on which such an act was established.
Furthermore, it provides that no CIC may decline to accept the registration of a credit or other credit establishment as a member without giving a suitable opportunity both to be consulted by that credit or other establishment and that its request for refusal and the record of the grounds for refusal shall be rejected and a copy of that refusal order shall be transmitted to the reserve bank.
Gaps in this section are that, in accordance with sections 5 and 6, there will be continued visibility for the cancellation or refusal to issue a document of registry to the CIC. Section 6 provides a fair way to be consulted by CIC before it cancels or refuses to register. Nothing shall be said anywhere about the termination of the affiliation of a credit institute which is already a member of a CIC, and the act shall also be deemed not to mention that the credit institute is given a suitable chance to be listened to prior to the termination of its affiliation.
Since the action on this issue is not taken, the CIC may terminate the affiliation of a credit entity without giving an adequate period of notice, which in turn may cause enormous loss and jeopardise the credit entity's reputation. This gap must therefore be closed by an amendment to the act laying down a rationale for the termination of the credit institution's affiliation.
18 of the Act provides that if credit information companies, credit institutes, credit takers and customers have disagreements regarding credit information related issues for which no remedies are provided under the Act, such disagreements shall be resolved by mediation or arbitration under the 1996 Act.
It was found that the applicant was a manager of a business and that one of the employees who showed the applicant as surety received a credit from LIC housing Finance Ltd. LIC provided imprecise credit information from the applicant to CIBIL because the staff member was in arrears with the payment of the credit.
Therefore, the applicant submitted a claim to RBI for the resolution of incorrect credit information but was not supported by them. In the Supreme Court's opinion, the lawyers of LIC Housing Finance Ltd, Credit Information Bureau (India) Ltd and the Reserve Bank of India have not reasoned that the applicant's request under Section 2.
18 (1) Referral of the Disputes Between Him and the Credit Information Bureau (India) Ltd. It should be noted, for example, that there was an appeal to correct the incorrect information under Paragraph 21, reading Regulation 25 of the Credit Information Companies Rules 2006, so how can the other appeals be interfered with, which are to be exploited only if there is no appeal under the law.
If the credit institutions or the CIC do not take measures to remedy the borrower's complaints concerning incorrect credit information, sanctions shall be imposed on the credit institutions or the CIC in accordance with §§ 23 and 25 of the file.
The granting of a proxy may authorise a party to obtain credit information on another party's behalf: - Section 17(2) and (4) of the Act provides credit information only to a credit information institution and to a particular recipient.
Now, the issue here is that if the credit information provided by the institution to third parties is not used for illicit purposes, is it contrary to the law? When an arrangement allows a individual to gather information on their behalf, will it remain in effect? In addition, whether a proxy entitles a Person to store information under this Act.
Again, the action is in silence and therefore no information can be given, even if a proxy is authorised. In summary, while this act has contributed to regulating the credit information of persons/companies and the data protection rules to be respected, it also has a number of gaps that need to be corrected for the proper operation of credit institution, CIC.