Here is the copy of mail I have already sent to CIBIL... your comments pls:
Dear Sir/Madam The below referenced details indicate my transactions with the credit cards. I would like to inform you that based on this feedback my personal loan application has been declined by some banks viz. IDBI, ICICI and AXIS. This is really funny as well as ridiculous. As you are aware, the mechanism by which the money is recovered in personal loan is vastly different than that of a credit card. The EMI deduction for a loan is directly from a savings or salary account on a scheduled date every month and in case of any default, the banks take definite number of cheques upfront which are blank and can use these cheques. If these cheques bounce, then the issuer of these cheques can be prosecuted directly. Which means, there is a considerable amount of care taken by the banks to protect their money in case of a defualt and the possibility of default to happen is greatly reduced. The banks make sure that the borrower is economically sound and stable and make sure upfront that he will not default by scrutinising all the papers like salary slips, bank statement, residence proof etc. This is my previous experience with the personal loan I have taken and there has been no single default in that case. Although there is no collateral guarantee, the possibility of default is very much less as the same is built into the system of lending personal loan and I think this system is sound enough. On the contrary, the credit card bill payment may get delayed or defaulted as there is no provision for the same to deduct from the bank account or salary account and no precautionary measures taken as such from these companies to make their money secured. Paying these bills is at the sole descretion of the credit card holder and as such he may delay or even default as there is no systematic and desciplined action. Besides, due to erroneous collection systems used by many banks a credit card holder may get defaulted unnecessarily. In short, in the credit card system there is an inherent flaw in the system which can very much cause default or overdue payments. Unfortunately banks are using the credit card related feedback from cibil to make their credit decision which is highly illogical and erroneous for the reasons and differences mentioned above. They must consult cibil database for getting feedback on similar product and in my case it is the personal loan. My record for this is very clear and without a single defualt. They must use my credit card related feedback with cibil to decide weather I should be given a credit card or not if I apply for one. Making credit decisions for personal loan based on the report of credit card payments is senseless and I am sure you would agree on it! It is good to have such a system in place but if not used properly will do more harm than good, which is what is happening now. I have been unnecessarily refused from getting personal loans which I desparately need and my documentary compliance is quite satisfactory but banks should use the logical attitude to make the credit decision. You as CBIL are requested to give suitable guidelines in this regard so the banks can use a suitable baseline for deciding weather the loan be granted or declined, rather than blindly making the decisions based on an incompatible data and loose the business, create bitter feeling of distrust towards them and create a negative image about them, which I guess is started already. I hope you will consider my suggestions
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