New Delhi: The Finance Ministry has clarified that banks cannot deny loans to first-time borrowers merely because they lack a CIBIL score.
Replying in the Lok Sabha during the monsoon session, Minister of State for Finance Pankaj Chaudhary said the Reserve Bank of India (RBI) has advised banks and credit institutions not to reject loan applications solely on the absence of a credit history.
“RBI has not prescribed any minimum credit score for borrowers. In a deregulated credit environment, lenders take decisions based on commercial considerations, board-approved policies and regulatory guidelines. A Credit Information Report is only one input among several factors,” Chaudhary explained.
A CIBIL score—ranging from 300 to 900—is an indicator of an individual’s creditworthiness based on past repayment behaviour. While widely used, the ministry underlined that a low or non-existent score cannot automatically disqualify new borrowers. The government has also directed banks to carry out due diligence before sanctioning loans, including verifying repayment patterns, reviewing settled or restructured loans, and checking for defaults or write-offs.
Chaudhary further reminded that Credit Information Companies (CICs) can charge only up to Rs 100 for issuing a credit report, while every individual is entitled to one free electronic report annually under an RBI mandate issued in 2016.