Definition Of Public Credit Registry(PCR):
#A public credit registry will be formed as information store house where all loan information of individuals and corporate borrowers are stored .
#The registry will have all the current information on repayment history, unpaid debts, or credit outstanding.
#Public Credit Registry helps banks distinguish between a bad and a good borrower and thus it will help banks to reduce their stressed asset as well as NPA’s.
The Y.M. Deosthalee committee and Recommendations :
#The Y.M. Deosthalee committee was set up by RBI and had submitted its report in April, 2018.Its recommendations are as follows….
1.RBI should set up a Public Credit Registry and should be backed by a legal framework.
2.The RBI may also consider making PCR to a separate non-profit entity.
3.The setting up of the PCR will consolidate all financial information about borrowers ,time taken to get a loan, as well as the quantum of loan, sanctioned.
4. PCR will cover all types of credit facilities (funded and non-funded) extended by all credit institutions – commercial banks, cooperative banks, NBFCs, MFIs.
5. PCR also covers 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.
Advantage Of PCR :
—>Current credit information works in multiple systems in bits and pieces and not in a single window. PCR will rectify that drawback of multiplicity.
—>PCR will produce all relevant information about a borrower, across different borrowing products in one place so that the quality of information is increased and banks will able to reduce the NPA by giving loan only to specific customers who is able to repay.
—>It can flag early warnings on asset quality by tracking performance on other credits.
—>Banks now take innovative steps to lend as total credit information will be available at their hands.
—>With satisfactory payment history and validated debt details made available, it will increase the credit availability to micro, small and medium enterprises along with deepening of the financial markets.
—>When lending to MSME is increased ,it easy for the banks to support the policy of financial inclusion.
—>A transparent public credit registry would help the bankers to rely on objective data for making credit decisions and also enable them to defend their actions with market evidence when subjected to scrutiny.