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4h ago

Finance Ministry Clarifies No Minimum CIBIL Score, Tells Banks Not To Reject First-Time Applicants

The government says lending decisions rest on banks’ board-approved policies, with credit scores only one input.

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

  • MoS Pankaj Chaudhary told the Lok Sabha that the RBI has not prescribed any minimum credit score for sanctioning loans.
  • The RBI’s January 6, 2025 Master Direction advises that applications from first-time borrowers should not be rejected solely for having no credit history.
  • Lenders retain commercial discretion and must conduct due diligence and background checks before approving credit.
  • RBI rules cap what Credit Information Companies can charge individuals for their own reports at ₹100 and require one free full electronic credit report each year.
  • Industry practice often favors scores of around 700, but this is not a regulatory requirement; the four authorised CICs are TransUnion CIBIL, Equifax, CRIF High Mark and Experian.