<div>The Credit Information Bureau of India (CIBIL) will provide individuals with one free credit report a year, Reserve Bank of India Governor Raghuram Rajan said here on Monday.<br /><br />At present, the credit report is used by the lending institutions to check the credit-worthiness of an individual before granting a loan. The CIBIL charges Rs 500 for a credit report.<br /><br />“By the end of the year, the CIBIL will start providing individuals with one free credit report a year so that they can check their credit rating and can petition if they find possible discrepancies... So, along with a greater use of credit information bureaus, we need checks and balances on them, which the RBI is mandating,” he said, delivering the keynote address on Equity, Access and Inclusion – Transforming Rural India through Financial Inclusion at the National Institute of Rural Development and Panchayat Raj (NIRD&PR) here.<br /><br />“When an individual knows that a default has spoiled their credit rating and cut off future access to credit, at least for a while there is a strong incentive to make timely payments,” he said, stressing the need to increase the reach of these credit-rating institutions to rural areas, particularly the borrowings by self-help groups.<br /><br />Citing the example of Rajasthan, Rajan pointed out that digitisation of land records, accompanied by a guarantee of a certificate of final ownership by the state governments, will ease the use of land as collateral against which funds can be borrowed. “If only we can monetise land and make it more pledgeable as collateral, we can expand access to credit tremendously,” he said.<br /><br />Proposing the concept of forgiveness in case of default of huge educational loans by choosing a bad educational institution by mistake, Rajan said many countries have provisions for such forgiveness. “We propose that if you have a period of unemployment, then you can choose two moratoria over the period of student loans based on your inability to repay the loan or some kind of flexibility that we allow in agricultural loans.”<br /></div>
<div>The Credit Information Bureau of India (CIBIL) will provide individuals with one free credit report a year, Reserve Bank of India Governor Raghuram Rajan said here on Monday.<br /><br />At present, the credit report is used by the lending institutions to check the credit-worthiness of an individual before granting a loan. The CIBIL charges Rs 500 for a credit report.<br /><br />“By the end of the year, the CIBIL will start providing individuals with one free credit report a year so that they can check their credit rating and can petition if they find possible discrepancies... So, along with a greater use of credit information bureaus, we need checks and balances on them, which the RBI is mandating,” he said, delivering the keynote address on Equity, Access and Inclusion – Transforming Rural India through Financial Inclusion at the National Institute of Rural Development and Panchayat Raj (NIRD&PR) here.<br /><br />“When an individual knows that a default has spoiled their credit rating and cut off future access to credit, at least for a while there is a strong incentive to make timely payments,” he said, stressing the need to increase the reach of these credit-rating institutions to rural areas, particularly the borrowings by self-help groups.<br /><br />Citing the example of Rajasthan, Rajan pointed out that digitisation of land records, accompanied by a guarantee of a certificate of final ownership by the state governments, will ease the use of land as collateral against which funds can be borrowed. “If only we can monetise land and make it more pledgeable as collateral, we can expand access to credit tremendously,” he said.<br /><br />Proposing the concept of forgiveness in case of default of huge educational loans by choosing a bad educational institution by mistake, Rajan said many countries have provisions for such forgiveness. “We propose that if you have a period of unemployment, then you can choose two moratoria over the period of student loans based on your inability to repay the loan or some kind of flexibility that we allow in agricultural loans.”<br /></div>
