Retail borrowers may face difficulties in securing multiple personal loans due to new RBI norms mandating lenders to update credit bureau records every 15 days, down from the earlier monthly reporting cycle. 

The move aims to provide lenders with a clearer financial health picture, thereby reducing the risk of borrowers over-leveraging themselves with multiple loans.

The Reserve Bank of India has imposed a 15-day requirement for lenders to update credit bureau records starting January 1, 2025.

SBI chairman C.S. Setty has already brought up the issue of new borrowers taking out loans from many lenders, sometimes above their ability to repay. This new rule aims to address this issue. “This is likely to tone down multiple borrowings by the same individual,” he told TOI.

“Equated monthly installments (EMIs) are scheduled at various days throughout the month. A once-a-month reporting period may delay revealing defaults or payments by up to 40 days, resulting in out-of-date data for credit assessments. Switching to a 15-day reporting schedule would greatly eliminate these delays. More frequent updates enable lenders to capture defaults or payments more accurately and closer to real time,” said Sachin Seth, chairman of credit information business CRIF High Mark, according to a TOI report.

You are aware of how simple it is to forget to make payments if you have ever taken out more than one loan. However, lenders will now have a more up-to-date picture of your financial activities thanks to frequent updates.

Due to the frequent updates, the credit system will now more quickly reflect a borrower’s borrowing history if they take out personal loans from several lenders, frequently above their ability to repay. This lessens the likelihood that new loans will be granted while previous ones go unpaid.

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