Credit Score Not Mandatory for First-Time Borrowers, Clarifies Ministry of Finance – RBI Issues Key Guidelines
Credit Score Not Mandatory for First-Time Borrowers, Clarifies Ministry of Finance – RBI Issues Key Guidelines
Ministry of Finance Issues Clarification
The Ministry of Finance has clarified that first-time borrowers are not required to have a CIBIL score to avail of bank loans. The clarification was issued by Minister of State for Finance, Pankaj Chaudhary, during the Monsoon Session of Parliament.
Chaudhary stated that as per the Reserve Bank of India (RBI) Master Direction dated January 6, 2025, banks cannot reject a loan application solely because the borrower has no credit history.
RBI’s Stance on Minimum Credit Score
When asked if the RBI has set a minimum CIBIL score for loan approvals, Chaudhary confirmed that the RBI has not prescribed any minimum credit score requirement. Instead, individual banks and financial institutions decide eligibility criteria based on their internal policies and commercial considerations.
“In a deregulated credit environment, lenders take credit decisions as per their commercial considerations and Board-approved policies. A Credit Information Report (CIR) is one of the factors, but not the only determinant for granting a loan,” Chaudhary explained.
What is a CIBIL Score?
A CIBIL score is a three-digit number that reflects an individual’s credit history and repayment behaviour. It is issued by the Credit Information Bureau (India) Limited (CIBIL) and helps lenders assess a borrower’s creditworthiness.
Disclaimer: This article is for informational purposes only and should not be considered financial advice. Borrowers are advised to consult their respective banks or financial advisors before making loan-related decisions.
