India’s central bank is moving ahead with plans to set up the country’s first public credit registry

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• The Reserve Bank of India (RBI) has moved a step closer to establishing the country’s first public credit registry by zeroing in on six potential firms to set up the infrastructure for a digital database.
  
• The public credit registry will contain all the relevant details and build a comprehensive profile on debtors and wilful defaulters. It is envisioned as a one-stop shop for all loan information and borrower history.
  
• The RBI already has a credit database, the Central Repository of Information on Large Credits (CRILC), but this only pertains to loans worth ₹50 million and above.
  
  

The Reserve Bank of India (RBI) has moved a step closer to establishing the country’s first public credit registry by zeroing in on six potential firms to set up the infrastructure for the digital database, according to the Press Trust of India.

The expression of interest, which was released at the end of October, specified that only entities with a turnover of ₹1 billion or above in the three preceding financial years would be eligible to bid.

The companies that have been shortlisted include tech incumbents Tata Consultancy Services, WIPRO and the Indian subsidiary of IBM as well as Mindtree and Capgemini. The RBI’s next step is to seek proposals from all six vendors and decide on a specific one.

The public credit registry will contain all the relevant details and build a comprehensive profile on debtors and wilful defaulters. It will do this by combining information sourced from a variety of repositories run by regulators such as the Securities and Exchange Board of India (SEBI), Insolvency and Bankruptcy Board, Goods and Services Tax Network, the Ministry of Corporate Affairs as well as private and public lenders.

On 7 June, the RBI announced plans to set up India’s first credit scoring database following the submission of a report by a high-level committee tasked with a number of things, such as examining credit information gaps in the economy and assessing the best approach for setting up a registry.

The RBI already has a credit database, the Central Repository of Information on Large Credits (CRILC), but this only pertains to loans worth ₹50 million and above.

The public credit registry is envisioned as a one-stop shop for all loan information and borrower history. There are already four private credit information companies operating in India, but each have disparate data and objectives.

Not only will the public credit registry make it easier for small businesses to access loans at cheaper rates, it will also prevent lenders from extending funds to borrowers with a questionable credit history.

Hence, it could go a long way in preventing the further build-up of non-performing loans while increasing India’s ratio of private-credit to GDP. If a bank has the knowledge of spending and income flows of a borrower, it can structure a more customised repayment plan.

The project is expected to be implemented in a phased manner. The first phase will involve the registration and compilation of information from of all non-banking financial lenders (NBFCs) and scheduled commercial banks.


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