Enact new law to enable public credit registry, says RBI’s Acharya

Reserve Bank of India (RBI) deputy governor Viral Acharya on Monday said there is a need to enact a new law to bring the public credit registry (PCR) under its purview. A new PCR Act will ensure transparency in data acquisition and dissemination through access rights by various users, Acharya said at a session at the Ficci-IBA conference. “It is desirable to have a special comprehensive legislation overriding the prohibitions contained in all other legislations on sharing of information required for PCR. Otherwise, all such legislation will have to be amended separately, providing an exemption for sharing of information with PCR,” said Acharya.

The idea of a PCR was first mooted by Acharya himself last year at the Annual Statistics Day conference. He said the PCR aims to be an extensive database of credit information that is accessible to all stakeholders. From the point of origination of credit to its termination, the PCR will capture all lender-borrower accounts at one place. A high-level task force was set up under the chairmanship of Y.M. Deosthalee, which recommended the setting up of PCR by RBI in a phased and modular manner. There are several legal challenges around setting up a PCR, which would require the amendment of a slew of legislation, according to Acharya.

The RBI Act does not empower the central bank to regulate the registry as it does not fall within the definition of a financial institution. Besides, PCR being a “consent-based architecture” will require consent from different sources for sharing information. This will entail amending legislation separately, allowing an exemption to sharing of information. Acharya proposed that PCR be linked with other databases so that it reduces information asymmetry, allowing better decision-making by banks and other financial institutions. He also proposed the Corporate Identification Number and GSTN could be used in the PCR to aggregate data about borrowers from multiple sources. Acharya believes PCR, along with other digital infrastructure like eKYC, and Unified Payments Interface can bring down the cost of on-boarding customers who are currently excluded from formal credit.

The Mint, 21st August 2018