When Amit Modi, a Pune based network engineer, approached a bank for a home loan and the lender denied to sanction it, citing Credit Information Bureau of India (Cibil) reports that he had defaulted on one of the two cards he holds, he got a rude shock, as he holds only one card and he has paid his dues regularly.

After getting his Credit Information Report (CIR), he contacted the credit card issuing bank to rectify the mistake. Now, he hopes for a quick resolve of the case so that he can take a loan under the 'teaser rate' special home loan scheme that is likely to last for a few more days.

In an e-mailed response, a Cibil spokesperson told that a default rate of less than 0.001 per cent was competitive with bureaux of similar size and maturity globally. The bureau holds 15 crore credit card holders' record. As a credit information bureau, Cibil collects data from credit givers and creates a CIR. This report presents payment history from disparate institution data. Information merges when some parameters like name, age, date of birth and PAN overlap. For example, there can be confusion if there are two persons with similar names and staying in the same area.

In case of Modi, he needs to contact Cibil and request the institution to rectify the mistake. If he does not, bankers said that none of the banks would give him a loan. "It is a norm to reject applications, if CIR shows the applicant as a delinquent," said abanker, who forms credit risk policies at a private domestic bank. Many banks accepted that there were faults in the system. However, they opined that the bureau was evolving. "It is the best tool available to judge a customer," said the banker.

However, this is not the only problem that borrowers face while applying for loans or credit cards. Delay in sending data to Cibil by banks also creates problem. Bankers said that only 10-15 financial institutions send updated data to Cibil every month, while others do it on a quarterly basis. Many customers face rejection due to this delayed reporting. Take the case of Kolkata-based Amitava Roy. The bank reported him as a defaulter for an overdraft of Rs 1.2 lakh that he never availed of.

The biggest hindrance is that most banks do not accommodate error even if a customer has enough proof to show that he is not at fault. Shrikrishna Lele had agenuine dispute with his credit card company. However, despite showing the correspondences and documents he could not get a loan. "All the institutions insisted that I should get a 'no due' letter from bank," said Lele. According to bankers such cases need consideration, but bank's policy prevents such a move.

In case of an error related to data amalgamation, the only way for a customer is to write Cibil with relevant details and documents. If there is an error from bank's side, the customer has to approach the bank to rectify the error. "If none of the institutions resolves the issue, the customer can always approach Banking Ombudsman," said a regulatory source.

"The best thing to do is get CIR in advance even if you don't have any loan or credit card requirement. By doing this, a customer can know in advance about errors pertaining to Cibil account," said a banker. Currently, Cibil provides CIR reports through a manual process. A customer needs to send a demand draft of Rs 142 to get the report. However, the report will soon be available on internet. "The automated phase would be ready by the beginning of the next fiscal," said the spokesperson.

PROBLEM: Wrong data in the report or it shows erroneous loan or credit cards in your name

SOLUTION: Write to Cibil to rectify the mistake

PROBLEM: Cibil report classifies you as a defaulter despite clearing the dues

SOLUTION: Write to the bank to update the data. This will take at least four weeks. In case of emergency, get a no-dues certificate

PROBLEM: Classified as a defaulter for a loan or credit card that you never availed

SOLUTION: Approach the bank to close the case. Preferably, correspond through emails

SOLUTION: Report the case to Banking Ombudsman. Attach the email correspondences with the bank.

Ref: Business Standard, Section II-,Page No: 3.