CHENNAI: Inclusion of some entities like telecommunication companies and stock brokers in the category of "specified users'' of services of credit information companies is among the major features of the draft regulations relating to the Credit Information Companies (Regulation) Act, 2005, notified by the Reserve Bank of India on Wednesday.

Once the RBI regulations are finalised and notified after consideration of the feedback from stakeholders, it is expected to give a fillip to development of credit based on a more reliable information base, be it in respect of individuals or in respect of businesses. As per the Act, credit institutions, including non-banking finance companies (NBFCs), have to become a member of at least one credit information company (CIC).

According to the draft regulations, in addition to what has been provided under Sec. 2(I) and Sec.15 (8) of the Act, each of the companies in the following categories, duly registered with the appropriate authorities, shall be regarded for the purpose of the Act as a "specified user'' of the services of credit information companies: insurance companies, cellular/phone service companies, rating agencies, stock brokers and trading members of recognised commodity exchanges. The Securities and Exchange Board of India (SEBI) and the Insurance Regulatory and Development Authority (IRDA) would also be regarded as specified users.

Business activities

Besides the business of dissemination of credit information to credit institutions and specified users and conducting research mentioned in the Act, the draft regulations adds (as per powers granted to the RBI in the Act) the following activities to the list of business activities that can be undertaken by the CICs: providing credit information to individuals and corporate borrowers his/her/their own credit report, providing data management services to credit institutions who are members of the CIC concerned, collating and disseminating information related to property mortgaged to credit institutions and investments made in securities other than those issued by the Central government securities.

While the Act itself has prescribed minimum issued and paid-up capital limits for credit information companies, the draft regulations propose a maximum admission fee of Rs. 15 lakh chargeable by CICs on member credit institutions or other credit information companies who are also members of the CIC concerned. The CICs can charge amounts not exceeding Rs. 500 in the case of individuals and Rs. 5,000 in the case of other borrowers towards fee for providing credit information to a specified user in respect of such borrower.

A maximum fee of Rs. 100 is prescribed for providing credit information to individuals pertaining to the individual himself/herself.

The CICs and credit institutions should retain for a minimum of seven years all information collected and disseminated.

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