Collection and Furnishing of Credit Information

Unit II: The Collection and Furnishing of Credit Information by RBI
Synopsis
I. Introduction
II. Meaning of Credit Information
III. Meaning of Banking Company
IV. Power of RBI to collect information
V. Power to Call for returns containing credit information
VI. Procedure for furnishing credit information to banking companies
VII. Disclosure of Information prohibited
VIII. Certain Claims for Compensation Barred
I. Introduction
The Reserve Bank is empowered to collect credit information from banking companies and to
furnish such information in consolidated form to any banking company applying for the same
along with the prescribed fee. The RBI Act, 1934 contains provisions in this regard under
Chapter IIIA from sections 45A to 45G. This chapter was inserted in the Act in the year
1962. Let us first of all understand the meaning of Credit Information which has been defined
under section 45A(c) of the RBI Act, 1934.
II. Meaning of Credit Information
The term credit information means any formation relating to –

(i) the amounts and the nature of loans or advances and other credit facilities granted by a
banking company to any borrower or class of borrowers:
(ii) the nature of security taken from any borrower or class of borrowers for credit facilities
granted to him or to such class;
(iii) the guarantee furnished by a banking company for any of its customers or any class of its
customers;
(iv) the means, antecedents, history of financial transactions and the creditworthiness of any
borrower or class of borrowers; and
(v) any other information which the Bank may consider to be relevant for the more orderly
regulation of credit or credit policy.
The above mentioned items (iv) and (v) were added by the RBI (Amendment) Act, 1974.
Thus the term Credit Information has much wider coverage and significance.
III. Meaning of Banking Company
The term ‘banking company’ as provided under Section 45A(a) of the Act includes for this
purposes, a banking company as defined in section 5 of the Banking Regulation Act, 1949,
the State Bank of India and its subsidiary banks, the nationalized banks and any other
financial institution notified by the Central Government in this behalf. The term borrower is
also defined so as to include in case of a company its subsidiaries also, in case of Hindu
undivided family any member if the family or any firm in which such member is partner; in
case of a partnership, any partner or any form in which he is a partner and in case of an
individual of any firm in which such an individual is a partner.
IV. Power of RBI to collect credit information
Under Section 45B of the RBI Act, 1934, the RBI is empowered to collect credit information
from banking companies and also empowered to furnish it to any banking company if
demanded by it. Section 45B provides as under
The Bank may-
(a) collect, in such manner as it may think fit, credit information from banking companies;
and
(b) furnish such information to any banking company in accordance with the provisions of
section 45D.
V. Power to Call for returns containing Credit Information
Section 45C empowers the Reserve Bank to direct any banking company to submit to it the
statements relating to credit information in the specified time and form. Every banking
company shall be bound to comply with such direction. This Section provides that
(1) For the purpose of enabling the Bank to discharge its functions under this Chapter, it may
at any time direct any banking company to submit to it such statements relating to such credit
information and in such form and within such time as may be specified by the Bank from
time to time.
(2) A banking company shall, notwithstanding anything to the contrary contained in any law
for the time being in force or in any instrument regulating the constitution thereof or in any
agreement executed by it, relating to the secrecy of its dealings with its constituents, be
bound to comply with any direction issued under sub-section (1).
VI. Procedure for furnishing credit information to banking companies Disclosure of

Information prohibited
Under Section 45-D a banking company may make an application to the Reserve Bank to
furnish the applicant with such credit information as may be specified in the applications in
connection with any person. On receipt of the application, the Reserve Bank shall furnish the
credit information in its possession but it shall not disclose the names of the banking
companies which have submitted such formation to the Bank. Section 45 D provides that
(1) A banking company may, in connection with any financial arrangement entered into or
proposed to be entered into by it, with any person, make an application to the Bank in such
form as the Bank may specify requesting it to furnish the applicant with such credit
information as may be specified in the application.
(2) On receipt of an application under sub-section (1), the bank shall, as soon as may be,
furnish the applicant with such credit information relating to the matters specified in the
application, as may be in its possession:
PROVIDED that the information so furnished shall not disclose the names of the banking
companies which have submitted such information to the Bank.
(3) The bank may in respect of each application levy such fees, not exceeding twenty-five
rupees, as it may deem fit for furnishing credit information.
VII. Disclosure of Information prohibited
Under Section 45E of the Act it is provided that any credit information submitted by a
banking company to the Reserve Bank under section 45C or by the Reserve Bank to any
banking company under section 45D shall be treated as confidential and shall not be
published or disclosed except for the following purposes specified in the Act:
(1) Disclosure by any banking company of any formation furnished to the Reserve bank
with the previous permission of the Reserve Bank.
(2) Publication by the Reserve Bank of any information collected by it under this Section
in such consolidated form as it may think fit without disclosing the name of nay
banking company or its borrowers and
(3) The disclosure or publication by the banking company or by the Bank of any credit
information to any other banking company or in accordance with the practice and
usage customary among bankers or as permitted or required under any other law:
Provided that any credit information received by a banking company under this
clause shall not be published except in accordance with the practice and usage
customary among bankers or as permitted or required under any other law.
(4) the disclosures of any credit information under the Credit Information Companies
(Regulation) Act, 2005.]
Notwithstanding anything contained in any law for the time being in force, no court, tribunal
or other authority shall compel the Bank or any banking company to produce or to give
inspection of any statement submitted by that banking company under section 45C or to
disclose any credit information furnished by the Bank to that banking company under
section 45D.
VIII.Certain Claims for Compensation Barred
Section 45F of the RBI Act,1934 provides that no person shall be entitled to claim for any
compensation for any loss which occurs due to application of any of the above stated
provisions. Section 45G has been repealed by the Reserve Bank of India(Amendment)Act,
1974. Section 45F runs as under:
Certain claims for compensation barred.—No person shall have any right, whether in contract
or otherwise, to any compensation for any loss incurred by reason of the operation of any of
the provisions of this Chapter.

Collection and Furnishing of Credit Information

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Collection and Furnishing of Credit Information

Uploaded by

Copyright:

Available Formats

Unit II: The Collection and Furnishing of Credit Information by RBI

II. Meaning of Credit Information

III. Meaning of Banking Company

IV. Power of RBI to collect information

V. Power to Call for returns containing credit information

VI. Procedure for furnishing credit information to banking companies

VII. Disclosure of Information prohibited

VIII. Certain Claims for Compensation Barred

II. Meaning of Credit Information

The term credit information means any formation relating to –

III. Meaning of Banking Company

IV. Power of RBI to collect credit information

The Bank may-

VI. Procedure for furnishing credit information to banking companies Disclosure of

VII. Disclosure of Information prohibited

You might also like