Initial Steps Towards the Setting up of a Public Credit Registry for India

Viral V Acharya

Deputy Governor, Reserve Bank of India

Reserve Bank of India

Inauguration of Data Analytics Stack, IIT Madras 5th November 2017

State of Economic Research on India

A vibrant network is slowly but steadily emerging

> University and business school professors

> Analysts at banks, non-bank finance companies (NBFCs), rating agencies, among others

> Researchers at policy institutions and think tanks

> Probing inquiries and fact discovery by media

> Seminars, conferences, forums, panels, deputations

>  Global interest in studying India is surging

> More undergraduate and post-graduate (MS, PhD) students interested in pursuing Economics and Finance!

> Miles to go before we sleep… on a good, firm trajectory

A HUGE opportunity!

♣ Alongside banks and other financial intermediaries, need a parallel ecosystem of economic and financial data and information services that

> Collects, collates and generates new data points on the economy and financial markets

> Disseminates publicly or sells the data

> Analyzes, aggregates and researches data to provide information analytics

> Creates information-based business opportunities

> Aids analysis-driven policy-making and thinking

♣ Given our core human resource strength in computing and information systems, this is a low hanging fruit that has not yet been plucked


Real-time inflation and consumption metrics:

> E-commerce sites

> What are the sustained temporal and geographic variations in prices and quantities?

Employment statistics:

> Payments data; bank and NBFC KYC data; tax filing data

> Can Big Data help us compute quarterly unemployment rate?

Rural and informal economy:

> NBFCs; MFIs; FMCG companies; Night luminosity measures

> Do omissions of rural / informal economy in formal statistics mask economically relevant growth / inflation outcomes?

State finances:

> Implied credit rating/risk using RBI State Finances report

> What is the implied subsidy in borrowing costs?

Hot money flows and external sector vulnerability:

> Corporate bond, commercial paper, External commercial borrowings, Masala bonds – FPI investments (maturity/location)

> Which of the flows are “carry trades” and which are long-term?

Governance and corporate finance of pyramids and group companies:

> Consolidate individual company/subsidiary filings

> Are internal transfers tunneling or internal capital markets in response to credit constraints?

> Are foreign transactions round-tripping / tax-arbitrage or genuine investments?

Bank lending boom and bust cycles:

> Let me elaborate on this as a leading example as to how it could be done better

> Initial steps undertake n for Public Credit Registry (PCR)

Public Credit Registry for India

Tracking a credit transaction from source to destination, all through its life…

High Level Task Force

Announced at RBI’s August 2017 Monetary Policy Meeting

Held its 1st Meeting on 24th October 2017

Report Due by the 1st week of April 2018

Large Borrower Credit information in India

  • CRILC (Central Repository for Information on Large Credits) is the nearest at the RBI to PCR

– Set up in 2014-15

– SCBs report credit information quarterly on large borrowers (threshold INR 50 mn)

– Covers around 60% of loan portfolio and 80% of NPAs

– Slippages in asset quality (restructuring, continued non-performance) reported on as-and-when basis

Borrower level data set

– Designed entirely for supervisory purposes with focus on the reporting entity’s exposure to the borrower

– Pooled information shared with reporting banks only

– Steps underway to provide group-level exposure

Credit information in India – Contd.

  • BSR (Basic Statistical Return)-1 : comprehensive but not borrower- centric

– From 1972

– Account level credit information from March 2013

– Quarterly statistical return capturing spatial, temporal and sectoral metadata

No borrower identification

– Information published at aggregate level, granular data shared with researchers on a case-by-case basis with appropriate safeguard

  • Missing out on borrowing from other sources as well as important financial parameters of the borrowers to gauge their financial health
  • 360 degree view not available in any system

Advantages of a Public Credit Registry

  • Removal of information asymmetry, resulting in an efficient and optimum credit market

– Impact could be the greatest for MSME financing

– Flow-based credit origination, Fin Tech, …

  • Transparent credit information: pre- requisite for

Efficient credit assessment and pricing by banks

Sound risk management and financial stability

  • Risk-based, dynamic and counter-cyclical provisioning at banks
  • Effective supervision and early intervention by regulators
  • Effective re-structuring of stressed bank credits
  • Understanding workings of monetary policy transmission and identifying bottlenecks, if any

International Practice

  • World Bank Survey 2012 – 87 out of 195 countries surveyed had PCR
  • Private credit bureaus co-exist with PCRs – complementary role
  • Banks voluntarily provide credit data at the time of origination itself – near real time data – change in credit market conditions can be identified with little lag
  • Credit Register regularly provides reporting institutions with consolidated borrower exposure reports
  • Major credit information repositories – Spain, Germany, Portugal, Belgium, Ana Credit project of ECB
  • Credit register of Spain also includes records of loan applications to all banks with lender and borrower identity and characteristics

Terms of reference for the Task Force

  • To review the current availability of information on credit in India.
  • To assess the gaps in India that could be filled by a comprehensive PCR.
  • To study the best international practices on PCR.
  • To determine the scope / target of the comprehensive PCR: type of information to be covered along with cutoff size of credit, if any.
  • To decide the structure of the new information system or whether the existing systems can be strengthened / integrated to get a comprehensive PCR.
  • To suggest a road map, including the priority areas, for developing a transparent, comprehensive and near real- time PCR for India.

Task Force will look at

  • Scope / target of the comprehensive PCR: type of information to be covered along with cut-off size of credit, if any

– Bank-borrower loan-level data detailing loan terms at time of origination along with data on borrower’s economic and financial health

– The internal and external ratings and their evolution

– Bank-borrower loan-level restructuring data with all details

– Secondary loan sales and price information

– Borrower-debt level Default and Recovery data

  • How to cover all important financial parameters of the borrowers that are relevant to the financial health – assets, trade credits, utility bill payments?
  • Task Force needs to closely look at Credit Bureaus – potential for symbiosis with the proposed PCR


  • Structure of the new information system or whether the existing systems can be strengthened / integrated to get a comprehensive PCR

– To build a new comprehensive information system from bottom-up or linking existing systems and building on top of that?

LEI reporting has been made mandatory in CRILC along with ongoing PAN

Wherever available, Aadhaar, PAN, CIN, LEI reporting is being mandated in BSR-1

– Tapping the credit bureaus

  • Road map, including priority areas

– Modular project implementation with timeline to attain the goal

Constitution of the Task Force

  • Represents, subject to size constraints, major stakeholders including banks, non-banks, industry bodies, IT experts, besides the banking supervisor
  • Task Force will consult a much larger set of entities, especially

credit bureaus, and

credit rating agencies,

which are not directly part of the Task Force for technical reasons

  • It will consult International bodies (World Bank, Central banks with PCRs) and academics
  • Its proposals need to pass through the legal scrutiny as well as be endorsed by cyber security experts

♣ Public Credit Registry won’t be a panacea…

Not everything that counts can be counted; and not everything that can be counted counts.”

– Albert Einstein

It is a sobering thought for economists!

But it should nevertheless induce innovations to count better what really counts!!

Public Credit Registry for India is a step in this direction.

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November 2020