WHAT IS Public Credit Registry (PCR)
“It is 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,
The constitution of a High Level Task Force (HTF), under the
chairmanship of Shri Y.M. Deosthalee, and consisting of eminent experts from
various stakeholders, was announced by the RBI in Part B of its monetary policy
statement dated October 4, 2017. As enunciated in its terms of reference, the
HTF has
a) reviewed the current availability of information on
credit and assessed the gaps in India that could be filled by a PCR;
b) studied the 5 A Case for Public Credit Registry in India
– Argentina Australia Brazil China Euro area India Indonesia Israel Japan Korea
Mexico Norway Russia Saudi Arabia Singapore South Africa Turkey United Kingdom
United States Credit to GDP ratio (as % of GDP) Q4 2017 Countries 3 best
international practices on PCR to determine the scope and target of a PCR for
India including the type of information to be covered; and
c) Deliberated on the structure of the new information
system or whether the existing systems could be strengthened and integrated to
get a PCR, thereby suggesting a roadmap, including the priority areas, for
developing a transparent, comprehensive and near-real-time PCR for India. The
PCR aims to be an extensive database of credit information for all credit
products in
Why PCR
It is a known fact that a large part of the Indian economy
is informal. This year’s Economic Survey has given us an estimate, sourced in large
part from the implementation of the Goods and Services Tax Network (GSTN).
About 0.6 percent of firms – accounting for 38 percent of total turnover, 87
percent of exports, and 63 percent of GST2 liability – are in what might be
called the ‘hard core’ formal sector in the sense of being both in the tax and
social security net. Estimates also suggest that the informal economy employs
nearly 50 per cent of the workforce in India3 . The earnings of some in the
informal economy may be at par with their formal economy counterparts, but due
to its informal nature, people and businesses in this part of the economy are
rendered ‘invisible’ to the formal banking system. This ‘invisibility’
adversely affects their ability to grow current income level because of lack of
access to formal credit
In spite of the private credit bureaus operating for several
years and doing a vital job for retail credit scoring, the central bank could
not precisely assemble data on the quality of the credit portfolio of banks’
large borrowers at an aggregate level. The data are simply not being reported
with integrity and full coverage in case of large corporate borrowers. That is
where RBI’s Central Repository of Information on Large Credits (CRILC),
initiated in 2014, made a huge difference, even if it was somewhat late to be
set up. CRILC provides a timely window on any degradation of credit of a large
borrower at a bank to the central bank and to other banks having the same
entity as a borrower. The Asset Quality Review (AQR) that followed in 2015
relied heavily on CRILC data to cleanse the Augean stables of massive and
unrecognised non-performing assets (NPAs) that have saddled our banks. The
credit information system, as a whole, has many such gaps which leave much
scope for improvement.
The PCR aims to be an extensive
database of credit information for all credit products in the country, from
point of origination of credit to its termination (repayments, restructuring,
default, resolution, etc.), eventually covering all lender-borrower accounts
without a size threshold. As of today, information on borrowings from banks,
non-banking financial companies (NBFCs), corporate bonds or debentures from the
market, external commercial borrowings (ECBs), foreign currency convertible
bonds (FCCBs), Masala bonds, and inter-corporate borrowings are not available
in a single data repository. The main objective of the PCR is to fill this
lacuna and capture all the relevant information about a borrower, across
different borrowing products, in one place. Moreover, significant parts of this
registry of borrowing contracts and repayment history will be accessible to all
stakeholders provided they too share their data with the PCR.
The PCR in India has been conceived as a data infrastructure
that the financial ecosystem within and outside the Reserve Bank would be
drawing data from as per the PCR’s access policy. The prospective users will
include lenders like banks and non-bank lenders including the new “fin-tech”
lenders; others providing data analytics such as rating agencies and credit
information companies; as well as regulators.
At a broad level, the PCR increases the efficiency of
lending institutions by reducing information asymmetry using a PCR, the lender
can get a 360 degree view of the borrower’s other outstanding credits and past
performance, allowing better screening at time of credit origination and
superior monitoring during the life of the credit. This is a well-studied
phenomenon and has been recorded in many research studies.
Organization:
The PCR is initially being set up within the existing RBI
infrastructure. The Reserve Bank, being a statutory corporation, can do only
those activities which are permitted by the Reserve Bank of India Act, 1934 or
other legislations. In addition to its core central banking functions, the
Reserve Bank also performs certain promotional functions.
Core credit information(mendatory) will be received from
A)
Banks
B)
NBFC
C)
Regulated FIs
However, this
secondary information data base will come from
1.
PUBLIC CREDIT REGISTRY (PCR) Core Credit
Information Banks/ NBFCs/ Regulated FIs (such as domestic borrowings, ECBs and
all contingent liabilities)
2.
PCR-MCA Sub System: Company ID Details,
Company Financial details etc.
3.
PCR-Fraud Database sub system:
4.
Wilful Defaulter list, RBI Caution list,
CFR, ECGC etc.
5.
PCR-SEBI Sub System: Promoter, Shareholding
Market Borrowing
6.
PCR-Legal Database Sub System: Litigation
against debtor/ promoter Tax/ UtilityPayment Arrear
7.
PCR-IBBI Sub System: IBBI Listing Status
8.
PCR-GSTN Sub System: GST Details
9.
PCR-CERSAI Sub System: Securitized Asset
Details Borrowers Creditors RBI Other regulations
User will be creditors RBI, Other
Regulatory Bodies, Borrowers Also
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