Digital Public Credit Registry (PCR) in India – An overview

Public Credit Registry (PCR) was indicated as a prerequisite by Reserve bank of India (RBI) for moving towards equitable and timely access to credit. PCR was muted as a giant step towards formalizing credit in India. RBI has now kick started the process of establishing a Digital Public Credit Registry. It has invited Expression of Interest (EOI) for setting up digital PCR from companies having turnover more than 100 crores in the previous three years.  

Public Credit Registry (PCR) for India – Constitution of  HTF 

After the initial indication about setting up a PCR by RBI in July 2017, a High Level Task Force (HTF) was set up under the chairmanship of Shri Y.M. Deosthalee. Constitution of the committee was mentioned in Part B of RBI Monetary Policy dated October 4, 2017. The committee consisted of experts from various fields. The committee was entrusted with the task of studying  availability of information on credit, gaps that can be filled by a PCR, best international practices and scope of PCR in India and suggesting a roadmap for setting up a transparent and comprehensive PCR. The HTF submitted its report on April 04, 2018 and recommended setting up a Public Credit Registry by RBI. The recommendations were made available in public domain for feedbacks and an Implementation Task Force was constituted, which has now come out with invitation of EOI. 

Public Credit Registry (PCR) for India- What does it mean?

Primary task of a digital Public Credit Registry is to enable banks and financial intuitions to take judicious credit decision. PCR will provide reliable real time information about prospective borrowers to support credit decisions. Information from PCR will enable banks to create a 360 degree profile of the borrower. The digital Public Credit Registry will have information of all borrowers including willful defaulters. It will also have up to date information on pending legal suits. Along with such financial details, PCR will collate details from various sources like market regulator Securities and Exchange Board of India (SEBI), Insolvency and Bankruptcy Board of India (IBBI), Central Fraud Registry, CERSAI, utility billers,  Goods and Service Tax Network (GSTN). Thus, the PCR will become an easy and must refer source for banks in credit decisions.   

The Public Credit Registry will be exhaustive database of financial information for all credit products in the country, from point of origination till its settlement. It will capture the details of the borrower throughout the credit life like repayments, restructuring, default, resolution, etc. PCR is envisaged to cover all lenders and borrowers without a ceiling on size. At present, information on credit from banks, Non-Banking Financial Companies (NBFCs) , borrowing from market through corporate bonds or debentures, External Commercial Borrowings (ECBs), Foreign Currency Convertible Bonds (FCCBs), Masala bonds, and nter-Corporate Borrowings etc are scattered across various platforms and not readily available in a single data repository. PCR will address these gaps and the data will be made available to all stake holders who are ready to share their data with the PCR.

Public Credit Registry (PCR) for India – What are the advantages?

The PCR in India is conceived as a data infrastructure for collating information in the financial ecosystem both within and outside the domain of Reserve Bank of India. The data can be accesses by all players in financial segment like, banks, NBFCs, fin-tech lenders, providers of data analytics such as rating agencies, credit information companies and various regulators.

Reliable data from PCR will enhance the quality of decision making by lenders. At the same time consolidation of data will enable regulators to take informed policy decisions. The PCR will enhance efficiency of lending institutions by eliminating information asymmetry. Information on the borrower’s outstanding credits and past performance will enable better screening at the time of credit origination. Early warning signs of asset quality can be identified by monitoring the performance in the limit extended by the lender and information from the PCR and that will enable initiation of early remedial measures.

In Indian, where many borrowers do not have a credit history, the PCR will be a remedy for lack of credit history. Aadhaar based payment, Unified Payments Interface (UPI) for digital payments and increased penetration of digital banking are leaving reliable digital footprints. GSTN has emerged as a dependable data source for accurate turn over. With PCR in place, the costs of on-boarding of customer even not having credit history will come down drastically. Further, the cost of borrowing also will come down. This will lead shift from collateralized lending to turn over based lending at highly affordable rate leading to better financial inclusion and better credit delivery mechanisms.