RBI to set up Public Credit Registry on all borrowers

In a bid to check loan defaults, RBI said today that a Public Credit Registry (PCR) will be set up containing information on all borrowers to ensure financial stability.

Following a report by Yeshwant M Deosthalee headed High Level Task Force, RBI said it has considered the recommendations and decided to set up a PCR in a modular and phased manner.

An Implementation Task Force (ITF) is being constituted to help design and undertake logistics for the next steps in setting up of the PCR, it said after the second bi-monthly monetary policy review of 2018-19.

"With a view to remove information asymmetry, to foster the level of access to credit, and to strengthen the credit culture in the economy, there is a need to establish a PCR," the Deosthalee panel said in the report, made public today.

The PCR, it said, maybe the single point of mandatory reporting for all material events for each loan, notwithstanding any threshold in the loan amount or type of borrower.

"Thereby, the PCR will serve as a registry of all credit contracts, duly verified by reporting institutions, for all lending in India and any lending by an Indian institution to a company incorporated in India," said the report submitted to the RBI in April.

Currently, there there are multiple granular credit information repositories in India, with each having somewhat distinct objective and coverage.

Within the RBI, CRILC is a borrower level supervisory dataset with a threshold in aggregate exposure of Rs 5 crore.

Also there are four privately owned credit information company (CICs) operating in India. RBI has mandated all its regulated entity to submit credit information individually to all four CICs.

CICs offer, based on this unique access to the credit data, value added services like credit scoring and analytics to the member credit institutions and to the borrowers, for commercial purposes.

The report noted that at present, credit information is spread over multiple systems in bits and pieces.

Information on borrowing from banks, NBFCs, market, ECBs, FCCBs, Masala Bonds, inter-corporate borrowing are not available in a single repository.

"This makes it very difficult to form a comprehensive view of total indebtedness of a borrower", it said, while making a case for expediting the setting up of the PCR.

In many countries, the task of organising the collection and sharing of credit data through a PCR is entrusted to a public authority, mainly the central bank, by law.

As reporting to the PCR is mandatory by law, high level of coverage of the credit market is ensured.