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Finance Ministry Clarifies First-Time Borrowers Cannot Be Denied Loans Solely for No CIBIL Score

The ministry cited RBI guidance that sets no minimum credit score for sanctioning loans.

While a CIBIL score may not be mandatory for first-time borrowers, the finance ministry has still asked banks to undertake their due diligence and conduct background checks on the applicants.

Overview

  • Minister of State for Finance Pankaj Chaudhary told the Lok Sabha that lenders should not reject new applicants just because they lack a credit history.
  • Lenders will continue to take credit decisions under board‑approved policies and regulatory guidelines, with credit reports treated as only one input.
  • The government reminded banks to conduct due diligence for first‑time applicants, including checks on past repayment patterns, settled or restructured loans, and any write‑offs.
  • RBI requires credit information companies to provide one free full electronic credit report each year and caps the fee for additional reports at ₹100.
  • India has four authorised credit bureaus that issue reports and scores: TransUnion CIBIL, Equifax, CRIF High Mark, and Experian.