RBI initiates work on public credit registry

To provide a single-point and real-time source for financial liabilities of a person or entity, the Reserve Bank of India has decided to set up a public credit registry (PCR) in a modular and phased manner.

“An Implementation Task Force (ITF) is being constituted by the Reserve Bank of India to help design undertake logistics for the next steps in the setting up of the PCR,” said the RBI in its Statement on Developmental and Regulatory Policies, which was issued along with the second bi-monthly monetary policy statement.

Task force report

Its decision is based on the report of the task force it had appointed last October, which pointed out that credit information is spread over multiple systems in bits and pieces, making it difficult to get a comprehensive view of the financial liabilities of a person or entity.

“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,” said the report of the panel, led by YM Deosthalee, ex-CMD, L&T Finance Holdings. It had submitted its report to the RBI on April 4 this year.

The setting up of the PCR is significant as the financial information about borrowers exists at present in silos and often impacts the time taken to get a loan as well as the quantum of loan sanctioned.

Within the RBI, CRILC is a borrower-level supervisory dataset with a threshold in aggregate exposure of ₹50 million, whereas the BSR-1 is a loan-level statistical dataset without any threshold in amount outstanding and focusses on the distribution aspects of credit disbursal. Also, there are four privately-owned credit information companies in the country.

“A comprehensive credit information repository covering all types of credit facilities (funded and non-funded) extended by all credit institutions – commercial banks, cooperative banks, NBFCs, MFIs – and also covering borrowings from other sources, including external commercial borrowings and borrowing from market, is essential to ascertain the total indebtedness of a legal or natural person,” said the High Level Task Force on Public Credit Registry for India in its report, which was made public on Wednesday.

It had also suggested that the registry should facilitate linkage to related ancillary credit information available outside the banking system, such as corporate balance sheet information and GSTN, depending on the legal provisions.

However, it had recommended that the registry should not include elements of judgment such as credit scoring services and had also called for strict privacy guidelines.

“Considering the broad scope of the PCR, the project may be implemented in phases with maximum coverage to be achieved in the first phase itself by on-boarding all scheduled commercial banks and top NBFCs, which are already submitting CRILC and BSR-1 to the RBI and all urban cooperative banks,” it had said in its report. It had also stressed on strict privacy guidelines.

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