For all the woes the pandemic has brought upon us, it has had some benefits. One of these benefits is the widespread shift to online for conducting activities such as studying, teaching, working, and financial transactions. Subsequently, the fintech sector grew rapidly during the pandemic, which accelerated the adoption of digital payments in the country. Several fintech startups evolved into unicorns last year as well, contributing to the 40+ unicorns that cropped up in India in 2021.

In what is another major development in the fintech sector, fintech companies can now register as users and have access to credit information bureaus. Fintech companies lacking an NBFC license but facilitating credit through a partnership with banks will reap the rewards, and e-commerce companies can now offer the “Buy Now Pay Later” (BNPL) option in partnership with lenders on their website.

This move was made by the RBI, India’s central bank, thereby reversing its stance from three years ago.

Back in 2019, the RBI had maintained that fintech startups would not have access to the credit information of consumers. It had also asked banks and NBFCs (Non-Banking Financial Companies) that banks had been appointing fintech startups as agents, but that was against the norms.

Credit information bureaus collect and research individual credit information and sell it to creditors. There are four credit information bureaus in India, established and licensed by the RBI. They are TransUnion Credit Information Bureau (India) Limited or CIBIL (India’s first credit information bureau), Equifax, Experian, and CRIF High Mark (which launched India’s first microfinance bureau in 2011).

This move comes two months after the RBI had amended the Credit Information Companies Regulation 2006 through a gazette notification. The notification in question enabled the “entities engaged in the processing of information, for the support or benefit of credit institutions and satisfying the criteria laid down by the RBI” to access the credit histories of individuals.

Under the new regulations, companies who want to process information to support regulated lending entities such as banks and finance companies should meet a few requirements. They should have a net worth of over ₹2 crores and should have to be Indian-owned and have diversified ownership. Additionally, they must have a certification from the CISA (Cybersecurity and Infrastructure Security Agency) certified auditor that says that it has a robust and secure information technology system in place.