Telangana HC warns Centre against unregulated dissemination of personal data in credit reports

Hyderabad: Telangana High Court has issued a `final warning’ to the Union Finance Ministry over the unregulated dissemination of personal data in credit reports.

On Wednesday, a division bench of Chief Justice Aparesh Kumar Singh and Justice Ghouse Meera Mohiuddin expressed dissatisfaction with the Union Government’s delay in responding to a Public Interest Litigation (PIL) that has been pending for over four years.

The Legal Stand-off: A Timeline of Silence

The PIL, originally filed in 2021 by Hyderabad resident Krupa Soni, challenged the current framework under which Credit Information Companies (CICs) operate.

Despite notices being issued to the Reserve Bank of India (RBI) and the Finance Ministry as far back as December 2021 and May 2023, the court noted that counter-affidavits from the key respondents remain pending.

Key Court Directives:

Deadline Set: The Union Finance Ministry must file its counter-affidavit by March 17, 2026.

Penalty Warning: The Bench explicitly stated that "costs would be imposed" if the Ministry fails to comply by the next hearing.

Accountability: The direction was specifically marked to the Principal Secretary of the Finance Ministry.

Privacy vs. Credit Reporting

At the heart of the petition is a challenge to the Credit Information Companies Amendment Regulations, 2021. The petitioner argues that the current system allows private entities to collect, process, and disseminate sensitive personal information without sufficient safeguards.

Ms. Soni’s petition seeks to restrain four major credit bureaus from publishing CIBIL score reports on platforms accessible to the public:

TransUnion CIBIL Limited

Equifax Credit Information Service

Experian Credit Information Company

CRIF High Mark Credit Information Service

"Such practices should be halted until a fair, transparent, and independent mechanism is formulated to handle disputed credit information," the petitioner argued, highlighting that incorrect data provided by banks can unfairly tarnish a citizen's financial reputation without a clear path for redressal.

The Stakes for the Common Citizen

The case arrives at a critical juncture as credit scores have transitioned from mere banking tools to "financial identities" used for everything from loan approvals to employment background checks.

The Petitioner’s Core Demands:

Stay on 2021 Regulations: A judicial intervention to pause the RBI’s updated notification on credit reporting.

Data Protection: A halt on the "public" accessibility of sensitive financial summaries.

Dispute Resolution: The creation of a robust, independent system to verify and correct disputed data provided by lending institutions

The court’s decision on March 17 will likely set a major precedent for how financial data is handled in India’s increasingly digital economy.