RBI may set up database of bank loans: Viral Acharya
RBI deputy governor Viral Acharya says the central database of bank loans will instil a better credit culture in the country
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Mumbai: The Reserve Bank of India (RBI) is considering setting up a central database of bank loans to instil a better credit culture in the country, deputy governor Viral Acharya said.
Setting up the public credit registry (PCR)— an extensive database of credit information which can be accessed by all stakeholders—is the need of the hour, Acharya said, calling it a high priority for the central bank. He was speaking at the 11th Statistics Day Conference on Thursday.
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As a first step, RBI is looking to set up a task force that can provide a roadmap for developing a powerful credit information system, he added.
“A transparent and comprehensive public credit register is the need of the hour in India. More and more countries are moving towards this with a view to improving the credit culture in their jurisdictions. Such registers help in enhancing efficiency of the credit market, increase financial inclusion, improve ease of doing business, and help control delinquencies”, Acharya said.
To start with, the central bank may look at converting its existing Central Repository of Information on Large Credits (CRILC) into a PCR covering banks’ customers, which can then be expanded to cover other financial institutions. CRILC hosts credit information of those with loans above Rs5 crore as reported by lenders. Over the past three years, this database maintained by RBI has expanded to account for around 60% of the loan portfolio and around 80% of the non-performing loans of banks, he said.
On the privacy of credit information, Acharya suggested the register be managed by a public authority like the central bank. He said reporting of loan details to the PCR by lenders and borrowers should be mandatory.
Several banks burdened with mounting non-performing assets or NPAs have been going slow in taking credit decisions. A public register would help them rely on objective data for making credit decisions and enable them to defend their actions with market evidence when subjected to scrutiny, Acharya added.