The Reserve Bank of India has directed asset reconstruction companies (ARCs) to set up a standard operating procedure for providing information to credit bureaus. 

The ARCs have to also become members of all credit information companies and submit the requisite data to them in the prescribed format. They were earlier required to be a member of at least one credit bureau.

TransUnion CIBIL, Experian, Equifax, and CRIF High Mark are four credit information companies (CICs) in India. 

The RBI, in a circular, said it has decided to align the norms for ARCs with the guidelines applicable to banks and NBFCs with a view to maintain a track of borrowers' credit history after transfer of loans by banks and NBFCs to ARCs.

"ARCs shall become members of all CICs and submit the requisite data to CICs as per the Uniform Credit Reporting Format prescribed by the Reserve Bank...," it said in a circular.

ARCs have been asked to put in place systems and processes to ensure compliance with the revised guidelines latest by January 1, 2025.

ARCs are firms that buy and resolve bad loans from financial institutions.

Credit bureaus compile credit scores and reports based on individuals' borrowing history, payment behaviour, and borrowing patterns.

Banks and non-banking financial companies share data with credit bureaus to help prevent defaults and facilitate responsible lending decisions, as well as track borrowers’ credit history.

In another circular, the Reserve Bank said all credit institutions (CIs) will continue to report credit information of the borrowers on-boarded and reported to CICs prior to cancellation of their licence or certificate of registration to all the four CICs till the loan life cycle is completed or the credit institution is wound up.