If you are a first-time personal loan borrower, you will typically require a credit score (CIBIL) to show evidence of your creditworthiness but now the Ministry of Finance has clarified that first-time borrowers will not be denied to get loans without CIBIL score.
Minister of State for Finance Pankaj Chaudhary informed the Lok Sabha during the monsoon session that the Reserve Bank of India (RBI) has not prescribed any minimum credit score requirement for loan approval. RBI has advised banks and financial institutions cannot reject applications if the credit score is less or zero for first-time applicants.
While CIBIL score may not be mandatory for the first time borrowers, bank still needs to perform due diligence and background checks. From now onwards checks would include examining credit history, past repayment history, delayed repayments, loans settled, restructured, written-off, etc.