CIBIL is NOT a part of the government. It is neither a part of the Reserve Bank of India nor a parliamentary act created it. However, the Credit Information Companies Jurisdiction Act of 2005 (CICRA), which effectively places CIBIL under RBI regulation.
The Credit Information Companies (Regulation) Act, 2005 authorized the RBI to establish it, and the CIBIL score allows banks and non-banking financial institutions to assess credit eligibility for loan and credit card applications.
It is now Transunion CIBIL, after Transunion acquired a 92% stake in the company in 2017.
Information about how people and businesses pay off their loans and credit cards is gathered and maintained by CIBIL. Banks provide information to CIBIL. They are used to create CIBIL scores based on the customer’s interactions with different financial institutions.
NOTE : You can get your CIBIL score on your phone for FREE.
Knowing a borrower’s credit history in advance helps any lender decide whether to issue them additional loans by determining the borrower’s credit worthiness and net worth.
Individuals’ credit-related information must be communicated on a common platform in order to control the flow of credit to the appropriate parties. Their timely repayment will enable a continuous flow of funds from one entity to the next, unblocking any funds that have been frozen due to non-repayment. Credit score is what determines eligibility.