Is there any Minimum CIBIL Score Guideline for Loan Sanction? RBI says NO

You must have heard of the CIBIL score. This score plays a very important role when applying for a loan from a bank. Banks often reject loan applications if the CIBIL score is below 700 or 650. Each bank has its own guidelines for the minimum CIBIL score requirement. But is there any such guideline from the RBI? Let’s find out.

The Reserve Bank of India (RBI) has not set any rule for a minimum credit score required to get a loan. In the current credit system, banks make their own lending decisions based on their Board-approved policies and overall business considerations, while also following RBI’s broad guidelines. The Credit Information Report (which includes your credit score) is one of the factors that banks review, but it is not the only factor. Banks also consider other aspects before deciding whether to approve a loan.

Reserve Bank vide referred Master Direction dated 6.1.2025 has advised Credit institutions that first time borrowers’ loan applications should not be rejected just because they have no credit history.

Then Why Banks force for CIBIL Score?

RBI said that banks, at the time of doing credit appraisal, are expected to undertake due diligence from various sources, including examining the credit history of the borrower based on the CIR from CICs.

Credit related matters of Regulated Entities (REs) are largely deregulated and the same are governed by the Board approved loan policies of the REs framed under the ambit of relevant regulatory and statutory requirements and terms and conditions of the loan agreement between the borrower and the RE. In this context, information on past repayment history, including information on delayed repayments, loans settled, restructured, written-off, etc., in the CIRs, is essential for assessing the creditworthiness of a borrower and to enable lenders to make informed credit decisions.

How many Credit Information Companies are in India?

Reserve Bank of India (RBI) has granted Certificate of Registration (CoR) under Section 5 of CICRA to four Credit Information Companies (CICs) for carrying on the business of Credit Information in India, as mentioned below:

• TransUnion CIBIL Ltd.
• Equifax Credit Information Services Pvt Ltd.
• Experian Credit Information Company of India Pvt Ltd.
• CRIF High Mark Credit Information Services Pvt Ltd.

The fee chargeable for obtaining credit score is regulated by RBI under the Credit Information Companies Regulations, 2006, which provide that a CIC may charge an amount not exceeding Rs. 100 for providing to an individual his own credit information. Further, vide circular dated 1.9.2016 on “Free Annual Credit Report to Individuals”, RBI has advised every CIC to provide one free full credit report including credit score in electronic format, once in a year to individuals whose credit history is available with the CIC.

National Financial Information Registry (NFIR)

Union Budget 2023-24 has announced setting up of a National Financial Information Registry (NFIR) as a central repository of financial information through a new legislative framework wherein NFIR is envisaged to serve as a repository of both credit and ancillary information, thus enabling comprehensive credit assessment of borrowers. The framework is proposed to be designed in consultation with RBI. However, currently there is no proposal to replace TransUnion CIBIL Limited with an alternate mechanism.