Current Affairs · Credit Reporting Norms & NBFCs
Which of the following best explains the conceptual logic behind the shift towards high-frequency weekly credit reporting as a regulatory tool for Non-Banking Financial Companies (NBFCs)?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1It aims to eliminate information latency by ensuring that 30-day payment delays are reflected in credit reports almost immediately, thereby preventing borrowers from securing new debt to service existing obligations before their updated delinquency status is visible to other lenders.✓
- 2It is designed to create a centralized automated block that prohibits all lenders from extending credit to any individual with a technical payment failure, such as a cheque non-presentation, to ensure absolute compliance with the RBI's zero-tolerance policy on overdues.
- 3The mechanism focuses on standardizing the reporting of 90-day default statuses to ensure that NBFCs can shift their entire risk assessment process from internal underwriting models to a purely bureau-dependent scoring system for all unsecured loans.
- 4The shift is intended to mandate that all NBFCs provide a legal justification to the Reserve Bank of India for every loan sanctioned to a new borrower, as part of a broader strategy to cap the growth of the consumer durable loan portfolio at 14% per annum.
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