The Ministry of Finance has clarified that a CIBIL score is not required for bank loans for borrowers who do not have a loan history and are borrowing for the first time.

The clarification was issued by MoS Finance Pankaj Chaudhary in Lok Sabha during the Monsoon Session of the Parliament. Chaudhary reiterated the Reserve Bank of India's directive and stated that banks can't deny a loan to a first-time borrower if the credit score is less or zero.

Chaudhary said, "As part of best practices for credit institutions, Reserve Bank vide referred Master Direction dated 6.1.2025 has advised CIs that first time borrowers’ loan applications should not be rejected just because they have no credit history".

Has RBI prescribed any minimum credit score?

Chaudhary also clarified that the RBi has not prescribed any minimum credit score for loan applications. The banks, other lenders set a minimum bar according to their commercial considerations.

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"In a deregulated credit environment, lenders take credit decisions as per their commercial considerations based on their Board approved policies and broad regulatory guidelines and the information contained in the Credit Information Report would be one of the inputs, amongst various other inputs/factors, that lenders would consider before granting any credit facility to a prospective borrower," the MoS added further.

What is CIBIL score?

It is worth mentioning that a CIBIL score refers to a three-digit number based on a person's credit history. It is called CIBIL because it is provided by the Credit Information Bureau (India) Limited (CIBIL) in India.

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The score is used by the financial institutions to determine the eligibility of a person for borrowing laons