In a key clarification for first-time borrowers, the Ministry of Finance has stated that banks cannot reject loan applications solely based on the absence of a CIBIL score.
Addressing the Lok Sabha during the ongoing monsoon session, Minister of State for Finance Pankaj Chaudhary said the Reserve Bank of India (RBI) has not set any minimum credit score requirement for loan approvals.
“First-time borrowers’ loan applications should not be rejected just because they have no credit history,” said Chaudhary, referencing RBI’s Master Direction dated January 6, 2025.
While a CIBIL score is not mandatory, banks are still required to perform due diligence and background checks. This includes evaluating an applicant’s credit history, any past defaults, loan restructurings, and written-off accounts.
Chaudhary emphasized that in India’s deregulated credit environment, lenders take decisions based on commercial judgment, board-approved policies, and multiple factors—CIBIL data being just one input among others.
About CIBIL Score:
A CIBIL score is a three-digit number ranging from 300 to 900, used to measure an individual’s creditworthiness. It’s issued by the Credit Information Bureau (India) Limited and is often considered by banks during loan assessments.
Charges for Credit Report:
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Credit Information Companies (CICs) can charge up to ₹100 to provide an individual’s credit report.
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As per RBI’s 2016 circular, every CIC must offer one free credit report per year (with score), in digital format.
