Super credit registry mooted

Mumbai: In a major move that could potentially reduce banking frauds and bad loans in India, the High Level Task Force set by the Reserve Bank of India (RBI) has recommended the creation of a Public Credit Registry (PCR) by the central bank backed by a suitable legal framework.

The PCR will be a single point of mandatory reporting for all material events for each loan availed by individuals or entities without any threshold in amount. It means even a Rs 10,000 loan from a micro lender would be reported to PCR.

The agency would even collect an individuals ancillary credit information like utility payments and insurance bills to generate credit history.   

“With a view to remove information asymmetry, to foster the level of access to credit, and to strengthen the credit culture in the economy, a PCR should be set up by RBI. In due course, RBI may consider to move the PCR to a separate non-profit entity,” the committee said in its 151 page recommendations.

The long term view for the PCR would be to establish itself as a single window for the lenders to access all factual credit information stored within PCR and other linked sub-systems. To make it effective, the committee said the head of “the PCR should be endowed with appropriate enforcement power to take action against any violation of rules and regulation.”  Currently, credit bureaus do not have enforcement powers.

The banking sector has witnessed several frauds running into thousands of crores due to lack of uniform information regarding the loans taken by individuals and entities or collaterals kept for availing those loans.

The committee noted that it is very important to capture all key credit  information like debt facilities, collaterals, gua-rantees among others of a particular borrower from multiple stakeholders. The data would be available relating to individuals and companies

PCR will have data loans granted by banks, NBFCs, MFIs, and loans borrowed from domestic market and overseas market such as ECB, FCCB and masala bonds.

Bid to stop loan frauds

•  After a spate of banking frauds by individuals as well as companies, RBI task force has recommended setting up of a single credit information repository to plug loopholes in the banking system. Here are recommendations:
• All payments made by an individual and a companies, including telephone bills, power bills, EMIs, etc. would be reported to the Public Credit Registry.

• Unlike current credit bureaus, PCR would be information on all kinds of borrowings that will help a lender to make a correct credit assessment.
• What will be reported to PCR:
• Loans from all kinds of banks, NBFCs, microfinance firms.
• All credit facilitieslike line of credit,guarantees.  
• Borrowing from debt markets.
• Payments made with respect to power, water, telephone  bills, tax, insurancepremium, etc.