The Central bank, however, is unlikely to approve this request considering the significant operational changes that lenders and credit bureaus will have to make in their existing technology infrastructure to adopt the practise.
| Photo Credit:
Andrii Yalanskyi
Considering the unsecured nature of small-ticket loans, micro-finance institutions (MFIs) in their latest meeting with the banking regulator requested the Reserve Bank of India (RBI) to mandate daily credit bureau updates from all lenders on the microfinance portfolio. The Central bank, however, is unlikely to approve this request considering the significant operational changes that lenders and credit bureaus will have to make in their existing technology infrastructure to adopt the practise.
“Since January last year, the RBI requires all lenders to update credit bureau records every 15 days. But our set of borrowers could apply with many institutions and take small-ticket and short tenure loans in that period. It is important that we track their credit history on a real-time basis, else they may avail an additional loan/s and we realise it only after 15 days. The recent over-leveraging of borrowers issue in the MFI sector partly happened because of this lag in data collection,” said a senior official of a MFI requesting annonymity.
However, this request will lead to massive data pile-up with the credit bureaus, and will be hard to implement by different categories of lenders, especially lenders who have small sized balance sheet with limited technology infrastructure in place, said people aware of the regulator’s thinking.
Further, MFIs have also requested the RBI to allow bio-metric enabled Aadhar card as a borrower authentication document. While the central bank is amenable to this request, it has to be approved by the Central government or by the apex court as the Supreme Court in 2017 ruled that lenders cannot mandate Aadhaar for authentication of borrowers.
“Post the 2017 court verdict, many MFIs are relying on voter IDs and PAN cards as authentication documents. These documents are not bio-metric enabled and can be manipulated. It is also critical that the KYC ID and the ID used in the credit bureau is the same for correct data” a source said.
Published on February 9, 2026
