• Source:JND
Add as a preferred

The Reserve Bank of India (RBI) defended credit rating companies in the Supreme Court for the collection of financial data of banking users in order to prepare credit scores. RBI stated that it was precisely the purpose behind Parliament enacting the Credit Information Companies (Regulation) Act, 2005 and companies do not need consent from the borrowers for this.

Petitioner Surya Prakash, a Bengaluru-based entrepreneur and educational trainee, had moved the apex court accusing the Credit Information Companies (CICs) of “illegally” collecting people’s financial information “by forced consent” and “selling the data to their members”. The plea also accused the CICs of “blatant abuse and violation of right to privacy”.

On May 6, 2024, the SC had issued notice on his plea and appointed Senior Advocate K Parameswar as amicus curiae. A bench, presided by Justice Surya Kant, will hear the matter next on February 17.

READ MORE: ‘Unelected Individual’: 14 US States File Lawsuit Challenging Elon Musk's Position As DOGE Head

In a separate affidavit, the Indian Cyber Crime Coordination Centre (I4C), under the MHA, said, “in response to the averment made by the petitioner regarding data theft, I4C has requested the nodal officer of cybercrime units in all States/UTs vide letter… dated 14.08.2024 seeking information regarding FIR/case registered against credit information companies and fintech companies. However, the response is awaited.”

In its counter affidavit on December 23, 2024, the RBI stated that the plea raises “baseless, unfounded and speculative issues in complete ignorance of the provisions of the CICR Act and regulations”.

READ MORE: Mumbai Mega Block: Local Train Services To Be Affected On Central, Western And Harbour Lines On Sunday | Check List Here

The RBI said that the Act “was brought in as part of risk mitigating policy of the Government… to arrest accretion of fresh NPAs in the banking sector” and provides “for setting up the CICs for collecting, sharing, processing and collating as well as disseminating the credit information of clients/ borrowers/ prospective borrowers in the manner provided in the CIC (Regulation) Act so as to enable the lenders like banks and other financial institutions to take an informed decision while lending money to borrowers.”

The RBI said that the law “expressly empowers the credit information companies to collect, store and maintain as well as process the credit information of the borrowers and as such with the enactment of the CICR Act, the requirement of consent from the borrowers has been rendered otiose.”