Recently, RBI Deputy Governor Viral Acharya made a case for setting up a Public Credit Registry (PCR), incorporating unique identifiers: Aadhaar for individual borrowers and Corporate Identification Number for firms. What is PCR? A public credit registry is an information repository that collates all loan information of individuals and corporate borrowers. A credit repository helps banks distinguish between a bad and a good borrower and accordingly offer attractive interest rates to good borrowers and higher interest rates to bad borrowers. The move is based on the recommendations of a committee, headed by Y.M. Deosthalee. PCR will address issues such as information asymmetry, improve access to credit and strengthen the credit culture among consumers. It can also address the bad loan problem staring at banks, as corporate debtors will not be able to borrow across banks without disclosing existing debt. A PCR may also help raise India’s rank in the global ease of doin...
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