Major Relief for First-Time Loan Applicants in India: No Minimum CIBIL Score Required, Says Finance Ministry

New Delhi, October 11, 2025
In a significant move aimed at promoting financial inclusion, the Government of India has clarified that first-time loan applicants will no longer be required to have a minimum CIBIL score to be eligible for a loan. This clarification from the Ministry of Finance has brought relief to millions of young individuals, entrepreneurs, and small business owners who have long struggled to access credit due to the absence of a credit history.

Minister of State for Finance, Pankaj Chaudhary, informed the Lok Sabha that the Reserve Bank of India (RBI) has not mandated any minimum credit score for first-time borrowers. This policy is expected to greatly benefit those who are just beginning their financial journey and do not yet have a credit record.

What the New RBI Directive Says

The clarification comes following the RBI’s Master Direction issued on January 6, 2025, which instructs banks and financial institutions not to reject loan applications solely due to the lack of a credit history. The objective is to make India’s credit system more inclusive and accessible, enabling a broader section of the population to benefit from formal financial services.

This directive is now applicable to all scheduled commercial banks with immediate effect.

Who Benefits the Most?

The decision is especially advantageous for:

• Young professionals and recent graduates applying for loans for the first time
• Startup founders and entrepreneurs without existing credit history
• Women entrepreneurs seeking business capital
• Small business owners and self-employed individuals in semi-urban and rural areas
• Low-income applicants who previously relied on informal or high-interest sources for credit

Experts estimate that this change could positively impact 30–40% of India’s youth population, making it easier for them to secure loans for education, business, or personal needs.

How Will Banks Assess Loan Eligibility Now?

While the requirement for a minimum CIBIL score has been removed, banks will still conduct detailed evaluations to assess a borrower’s creditworthiness. Key assessment factors now include:

• Monthly/annual income
• Employment stability
• Existing financial liabilities
• Bank statements and asset declarations
• Business profile (for entrepreneurs)
• Past repayment records (if any), and
• Personal attributes such as age, education, and experience

This new approach focuses on overall financial strength and repayment ability, rather than relying on a single numerical credit score.

Is CIBIL Score Being Abolished?

Despite rumors, the Finance Ministry has confirmed that CIBIL scores are not being discontinued. They remain a crucial part of India’s credit evaluation system, especially for borrowers with an established credit history.

Individuals with high credit scores will continue to enjoy better loan terms, such as lower interest rates and higher credit limits. The recent change simply ensures that new-to-credit individuals are not unfairly excluded.

Credit Report Fee and Free Access

According to the new RBI rules:

• The maximum fee for obtaining a credit report is ₹100
• Every individual is entitled to one full credit report per year for free, in electronic format

These reports include details such as credit score, loan history, credit card usage, and more. Financial literacy experts encourage citizens to review their reports regularly to detect errors or fraud and to maintain strong financial habits.

A Major Step Toward Financial Inclusion

This move is being hailed as a transformational step in democratizing credit access in India. Until now, millions were excluded from formal lending systems solely due to lack of a credit score, often forced to depend on unregulated moneylenders.

Combined with initiatives like the Jan Dhan Yojana and promotion of digital payments, this step aligns with India’s broader goal of ensuring universal access to financial services.

Economists believe this will not only empower individuals but also contribute to India’s overall economic growth, particularly in rural and semi-urban regions.

Disclaimer:

This article is for informational purposes only. Before applying for a loan, individuals should check the latest terms and conditions with their respective banks or financial institutions. Credit policies may change from time to time based on RBI guidelines. Always borrow responsibly and ensure you can repay loans as per the agreed schedule.