Section 16 of The Credit Information Companies (Regulation) Act, 2005. in hindi
Failure to become a member of a credit information company.
- (1)Where a credit institution--
- (a)abstains from becoming a member of at least one credit information company; or
- (b)at any time is not a member of any credit information company, the Reserve Bank suo moto or on a complaint from a credit information company may, direct such credit institution to take necessary steps within such time, as it may specify to become a member of a credit information company.
- (2)In case a credit institution fails to comply with the directions of the Reserve Bank under sub-section (1), to become member of at least one credit information company, the Reserve Bank may, without prejudice to the provisions of this Act, intimate such failure to any other authority for taking such action as it may deem fit.
Summary
- If a bank or other credit institution chooses not to join any credit information company, or stops being a member entirely, the Reserve Bank has the power to intervene.
- The Reserve Bank can take action on its own initiative (suo moto, meaning without being asked) or respond to a formal complaint filed by a credit information company.
- The Reserve Bank will direct the non-compliant institution to take the necessary steps to become a member within a specified timeline.
- If the institution ignores this direction and still fails to join, the Reserve Bank can officially report this failure to another authority so that further action can be taken against the institution.
Practical examples
FAQ
1. Who is allowed to complain if a bank refuses to share data by avoiding membership?
A credit information company is explicitly allowed to file a complaint to the Reserve Bank regarding this failure.
2. Can the Reserve Bank take action against a non-member bank even if nobody complains?
Yes, the Reserve Bank can act suo moto (on its own initiative) without waiting for a formal complaint.
3. Does the Reserve Bank immediately shut down a bank that fails to join?
No, the initial step is to issue a direction giving the bank a specific amount of time to take necessary steps to become a member.
Test yourself
1.Under Section 16 of The Credit Information Companies (Regulation) Act, 2005, what is the initial action the Reserve Bank takes when it finds out a credit institution is not a member of any credit information company?
2.Under Section 16 of The Credit Information Companies (Regulation) Act, 2005, who is explicitly recognized by the text as an entity that can file a complaint prompting the Reserve Bank to act against a non-compliant credit institution?
3.Under Section 16 of The Credit Information Companies (Regulation) Act, 2005, what is the consequence if a credit institution completely ignores the Reserve Bank's direction to become a member?
4.Under Section 16 of The Credit Information Companies (Regulation) Act, 2005, the Reserve Bank can act "suo moto". What does this legal phrase mean in the context of this provision?