Current Affairs

RBI to set up Public Credit Registry to Curb Bad Loans

Considering the recommendations of Yeshwant M Deosthalee's high-level task force committee, The Reserve Bank of India has decided to set up a Public Credit Registry which will work as an information repository to collates all loan information of individuals and corporate borrowers.

RBI to set up Public Credit Registry to Curb Bad Loans

Benefits of Public Credit Registry

  • The Public Credit Registry will help banks distinguish between a bad and a good borrower.
  • It will address information asymmetry, improve access to credit and strengthen the credit culture among consumers. 
  • It will help in addressing the bad loans problem facing the banking system
  • It will help improve India’s rankings in the World Bank’s ease of doing business index

Reason Behind Setting up PCR

  • Currently, there are multiple credit information repositories in India each having distinct objective and coverage. Within the RBI, CRILC is a borrower level supervisory dataset and there are four privately owned credit information company (CICs) operating in India. 
  • RBI has mandated all its regulated entity to submit credit information individually to all four CICs.
  • It is noted in the report that redit information is spread over multiple systems in bits and pieces and information on borrowing from banks, NBFCs, market, ECBs, FCCBs, Masala Bonds, inter-corporate borrowing are not available in a single repository. This makes it very difficult to form a comprehensive view of total indebtedness of a borrower", it said, while making a case for expediting the setting up of the PCR.

Recommendations of Yeshwant M Deosthalee Committee

  • The committee suggested that a comprehensive credit information repository covering all types of credit facilities (funded and non-funded) extended by all credit institutions is essential to ascertain the total indebtedness of a legal or natural person.
  • The  registry should facilitate linkage to related ancillary credit information available outside the banking system
  • Tthe registry should not include elements of judgment such as credit scoring services and had also called for strict privacy guidelines.

Expected Questions

The committee suggested that a comprehensive credit information repository covering all types of credit facilities (funded and non-funded) extended by all credit institutions is essential to ascertain the total indebtedness of a legal or natural person. It should facilitate linkage to related ancillary credit information available outside the banking system.
Based on the above-given information, answer the following questions.

1. Which of the following committee is talked about in the above information?
a. K.V. Sivaram Committee
b. Y. M Deosthalee Committee
c. R.V. Rao Committee
d. N.D Singh Committee
e. P.S Chawla Committee

2. The committee has suggested to set up 
a. Public Credit Registry
b. Public Credit Regulatory Authority
c. Public Credit Registry and Grievance Cell
d. Public Credit Registry and Regulation 
e. None of the above
RBI to set up Public Credit Registry to Curb Bad Loans RBI to set up Public Credit Registry to Curb Bad Loans Reviewed by insiya yadav on June 07, 2018 Rating: 5

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