Sunday, 8 March 2015

CIBIL - grinding on regardless

I was shocked to read that CIBIL now intends to use your utility bill payments to determine credit history.  I heard of this some time before but never thought that they will actually get down to implementing it.

There are reasons why this should not be implemented:-
telephone bill -
1. many a time, the telephone bill is inflated and you are in a protracted negotiation with the telecom provider for reduction of the bill. 
2. many outlets do not accept post paid mobile payments.
3. your job may involve frequent tours and you may not be available in the city to pay your bills.  all the bills paid after the due date will not only attract 'late fee' but also 'reporting to CIBIL' i.e you are doubly punished for the same event.
4. in any case, they charge a late fee of about rs 100/- (which is nearly 50% of your monthly plan) and they even cut your telephone within a month of not paying. they then charge reconnection charges also.
5. if DPD(days past due - which is number of days payment is due after the payment due date) is implemented just like in credit cards, the consumer will be under excessive pressure to pay the bill even if minor errors are present.  This will  unduly benefit the telcos and put the consumer at a severe loss.
other utility bills-
the same could be said about all the other bills also. best/govt electric agencies would not hesitate to cut off electricity to your house if the bill is not paid within a month.  so why should anyone be additionally harassed by virtue of reporting to CIBIL.

Presently, as you all are aware banks are sharing info with CIBIL. For example - if a fraudulent transaction took place on your card and you are in negotiation with the bank for dispute resolution,  the amount in question continues to remain as outstanding and would be reflected as DPD till the time the issue is resolved.  Many banks share info on a monthly basis and you continue to be a defaulter till the issue is resolved.  And even after it is resolved the onus is totally on you (and not on the bank) to get your name cleared in CIBIL.

If that is the case with banks (where the employees are more responsible) you can imagine the state of telcos (a routine interaction with the staff at any outlet of any major telco shows how careless they are). they would report you at the first possible oppurtunity and will not take your name off the list.

On the legal front, there are no penalties imposed on the banks for wrongful reporting to CIBIL and CIBIL by themselves claim that they are not responsible for any wrong reporting by any bank.  The individuals are advised by CIBIL to take up with the concerned bank directly.

To avoid all these problems and because utility bill amounts are small, the customer may be forced to end up coughing the money even if the amount is not due just to avoid a credit downgrade.  This is definitely not in the interest of the common man.

Finally, before the ambit of CIBIL is expanded to cover different kind of payments, it may be time to pitch for a regulatory framework wherein both the reporting banks/agencies and CIBIL are made accountable for wrong reporting.  

CIBIL especially cannot absolve themselves of responsibility because:-
1. they are making a lot of money in the process
2. the banks are basing their lending decisons on CIBIL data which means the dreams of many a common man are made or unmade based on the data supplied by them!!!!

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