Thursday, February 22, 2024

PIL Filed in Bombay HC: Shortfalls in Credit Rating Agencies’ Mechanism Needs Immediate Correction

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A Public Interest Litigation (PIL) was filed in the Bombay High Court recently by Hiten D Mehta & Attorney’s Alliance, accusing CIBIL (Credit Information Bureau (India) Limited) and other credit agencies of carrying on a flawed methodology/process that is leading to faulty credit score (creditworthiness) of individuals at large.

Petitioner – Mr Hiten D. Mehta is fighting for the victims of incorrect credit data reports. He, along with firm Attorney’s Alliance, is seeking directions from the Hon’ble Court to direct authorities to take steps to update and improve the credit ecosystem in the country so that the public can resolve their concerns to gain a proper resolution for their grievances, timely access to credit and be in control of their finances.

The petitioner, Dr Hiten Mehta, Founder of Bhavsar & Mehta & Co, further elaborates, “Banks and financial institutions rely upon an issuer’s ability to repay debt from an individual’s credit score assigned by the credit bureaus. CIBIL and other such rating companies can update your credit scores from time to time based on information fed in by credit-data furnishers in the system. As this is a manual process, there is a high probability of committing errors. The errors can lead to inaccurate ratings. Those consumers who are slapped with a low credit score may face many financial sufferings including rejection of their loan or credit card applications, among other things.” 

Although there is an RBI-monitored grievance redressal mechanism for complaints against the credit score agencies in India, still a great deal of wrongdoings goes undetected. Recent cases where ordinary people to celebrities like Actor Rajkumar Rao and Sunny Leone have fallen victim to financial fraud and, at the same time, their struggle with the poor service offered by such credit score bureaus are in the public forum. In many cases, individuals have suffered a low credit score due to incorrect and out-of-date information on PAN cards, names, addresses, and the latest balances being wrongly fed. Hiten Mehta, well known for helping people get rid of their financial crises, is working on this legal battle that asks for strict monitoring, scrutiny, and penalising of credit rating firms in all such cases.

A mere outstanding of Rs. 170 on a Credit Card which the individual was not even aware of, led the score of such individual to drop down to 630, making it difficult for him to avail a student loan for his son. At the time of loan processing, he got to know about the said outstanding. He immediately tried to rectify the same by making the payment of the outstanding amount, however due to the slow process of these credit companies, he could not update his Credit Score in time. 

Another such case was where the individual came to know about a fraudulent loan taken in his name after a recovery agent came to his place along with his credit score. When he checked his score, he realized that there are multiple cards and loans availed under his name, without his knowledge. He was shocked to see that without any sort of OTP verification or any such other verifications, his Credit score was affected.  

Hiten Mehta is well-versed in the complexities of Civil Litigation, NPA services, Debt recovery Laws and Taxation Laws.  

Known to be a legal rights defender, Mr Hiten Mehta has saved many people from committing suicide due to their financial disabilities. Today he has chosen this path as a full-time profession to help people on the crutches of financial crises and help them get back up on their feet. 

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