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Why the RBI wants a Public Credit Registry with Aadhaar and CIN linkage

In a speech at the RBI's 11th Statistics Day Conference, RBI Deputy Governor Viral Acharya made the case for a Public Credit Registry (PCR), incorporating unique identifiers for borrowers: Aadhaar for individuals, and Corporate Identification Number for companies. "Such registers", Acharya said, "help in enhancing efficiency of the credit market, increase financial inclusion, improve ease of doing business, and help control delinquencies. Incorporating unique identifiers for the borrowers (Aadhaar for individuals and CIN for companies), Reserve Bank’s BSR1 and CRILC datasets can quickly be converted into a useful PCR [Public Credit Registry] covering customers of SCBs [Scheduled Commercial Banks] to start with. It can then be expanded to cover other financial institutions in India. A comprehensive PCR down the road will be even more effective." "[RBI] Governor and I hope we can set up, as a matter of priority, a high-level task force that can provide a roadmap for attaining this goal of developing and unleashing a powerful credit information system for our country," he added. Why the RBI wants a Public Credit Registry 1. There is information asymmetry, which hurts good borrowers: The repository can capture and certify details of collaterals, enable writing of contracts and prevent over-pledging of collateral by a borrower. "In absence of the repository, the lender may not trust its first right on the collateral and either charge a high cost on the loan or ask for more collateral than necessary to prevent being diluted by other lenders." This leads to a spillover of one…

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Founder @ MediaNama. TED Fellow. Asia21 Fellow @ Asia Society. Co-founder SaveTheInternet.in and Internet Freedom Foundation. Advisory board @ CyberBRICS

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