Who to complain to? Netizens divided over Karti Chidambaram's stance on CIBIL scores

Congress MP Karti Chidambaram raised concerns regarding the Banking Laws (Amendment) Bill, 2024 during his speech in the Lok Sabha on Wednesday. He  expressed his opinions on banks relying on credit score for granting loans to the public. 

Speaking at the ongoing Parliament Winter Session 2024, he pointed out issues with the existing Know Your Customer (KYC) norms, calling it a form of harassment due to repetitive updates by banks, even when personal details remain unchanged. 

Chidambaram emphasized the lack of transparency in the process, especially with KYC outsourcing to third-party agencies. He also questioned the reliability and accountability of CIBIL scores, a private company managing credit histories for over 60 crore Indians. Chidambaram highlighted the absence of a proper redressal mechanism, which exacerbates the financial difficulties faced by a significant portion of the population.

“Like Chitra Gupta makes accounts of all our activities in this world to Yamadharma, there is this agency called ‘CIBIL’ which is keeping a record of all our transactions. If you want to take a car loan, or if the finance minister of the country wants to take a house loan, everything depends on the CIBIL score. But nobody knows how this CIBIL organization works; it is actually a private company called ‘TransUnion.’ This is the company that is rating every one of us based on our credit history, but we do not know whether they are updating our credit history properly. There is no transparency, and there is no way for us to appeal. There is complete asymmetry between the company that is rating us and us," he said. 

He further said, “Every time we go tell a bank, I have paid my loan on time, but they will say no your CIBIL score is bad. We do not know how to approach CIBIL. For farmers, when they get a subsidy from the government, when they use the subsidy to repay the loan, CIBIL does not update it. If you go for a settlement with the ARC, CIBIL does not update it. There must be greater transparency. The government has missed out an opportunity to make life easier by reforming these things instead of just tinkering in the margins.”

Netizens React

Responding to this, social media users were divided in their opinions. Some argue that the CIBIL score plays a crucial role in maintaining a proper financial history and encourages users to be more cautious with their finances. A user wrote, "First of all it is not cibil, it is a credit score and there are four companies giving credit score Customers can raise their dispute with them as well as their regulator i.e. RBI."

However, many users disagreed, raising concerns about the risks of a private entity holding such sensitive data, with potentially far-reaching repercussions in the event of a breach or security threat.

A user wrote, "Very true. There should be multiple agencies like CIBIL." Some users shared their experience with CIBIL scores saying "True!! I foreclosure my housing loan, my cibil got badly affected, I don't know how to approach the cibil to rectify it. Since then I am unable to take a new loan."