Indian Public Credit Registry Should be Boon for Economy: Win-Win for Borrowers, Lenders, Regulators If Done Right

A new report from the Asia-Pacific Credit Coalition (APCC) and the Policy and Economic Research Council (PERC) lauds the recommendation from the High-Level Task Force (HTF) of the Reserve Bank of India (RBI) to incrementally move forward with the development and implementation of a public credit registry (PCR) in India. The APCC/PERC report, titled “Reply to the HTF Report on Building a PCR in India,” is a supplement to an earlier PERC study on the broader issue of the relationship between PCRs and private credit bureaus (PCBs), of which there are four presently operating in India (CIBIL TransUnion, CRIF Highmark, Equifax, and Experian).

The HTF Report was completed in April, but published in June, and contains a series of recommendations on the matter of a PCR including: (1) the step-wise development of a large central repository containing data assets from the private and public sectors; (2) a near-term focus on securing access to government data assets helpful for prudential oversight; (3) a recognition of the need to prioritize data security given both the sheer volume and the sensitivity of the data to be collected by the proposed PCR; and (4) that the Reserve Bank of India is the most natural agency for overseeing the development and implementation of a PCR.

While the March 2018 APCC/PERC report reviewed the theoretical and empirical economic literature on the relationship between PCRs and PCBs, and discussed international best practices emphasizing guidelines from the World Bank and International Finance Corporation (IFC), the new study supplements this with an analysis of the HTF report and discussion of the possible implications for the Indian financial sector and economy. While the APCC/PERC Reply report is overwhelmingly supportive of many of the primary recommendations from HTF report, it does argue: (1) focusing on a capacity to use data is as important as collecting data; and (2) a PCR is most effective when complementing existing PCBs.

“This is a logical progression in the growth and evolution of India’s financial data ecosystem,” stated PERC CEO and President Dr. Michael Turner. “The Indian financial services sector has benefited tremendously from the fledgling private credit bureau (PCB) industry that has resulted in sustained growth in lending to the private sector while simultaneously improving loan portfolio performance. A PCR serving as a complement to existing PCBs can be a powerful tool for macro- and micro-prudential oversight, supervision, statistics, and risk management.”

The report from the APCC and PERC will be presented on September 25 at the World Consumer Credit Reporting Conference 2018 (WCCRC 2018) in New Delhi by PERC’s Senior Director of Research Patrick Walker. “WCCRC 2018 is the perfect venue to debut the new APCC/PERC report on the Indian PCR,” said Patrick Walker.

“The whole issue of the role and function of a PCR, as well as the growing data needs to enable PCRs to oversee and supervise the financial services sector, has come to prominence again in the wake of the 2008-2009 financial crisis. And with the recent Modi scandal in India, the issue has taken on a particular significance locally.”