Public credit registry to speed up digitisation

Reserve Bank deputy governor N.S.Vishwanathan on Monday said the introduction of a public credit registry will further speed up digitisation that has already changed the way banking is done in the country.

He said digitisation can help the country leapfrog over the developed countries and “we are in a sweet spot on digitisation.”

On the mushrooming of payments banks, which now act as banking channels of regular lenders, he said they can revolutionise banking services.

Already, many institutions have come together to provide financial services, reducing the need for intermediation, the RBI deputy governor said.

About Public Credit Registry:

The PCR will be an extensive database of credit information for India that is accessible to all stakeholders. The idea is to capture all relevant information in one large database on the borrower and, in particular, the borrower’s entire set of borrowing contracts and outcomes.

Management of PCR:

Generally, a PCR is managed by a public authority like the central bank or the banking supervisor, and reporting of loan details to the PCR by lenders and/or borrowers is mandated by law. The contractual terms and outcomes covered and the threshold above which the contracts are to be reported vary in different jurisdictions, but the idea is to capture all relevant information in one large database on the borrower, in particular, the borrower’s entire set of borrowing contracts and outcomes.

Benefits of having a PCR:

A PCR can potentially help banks in credit assessment and pricing of credit as well as in making risk-based, dynamic and counter-cyclical provisioning.
The PCR can also help the RBI in understanding if transmission of monetary policy is working, and if not, where are the bottlenecks.

Further, it can help supervisors, regulators and banks in early intervention and effective restructuring of stressed bank credits.

A PCR will also help banks and regulators as credit information is a ‘public good’ and its utility is to the credit market at large and to society in general.

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