According to RBI, setting of a public credit registry (PCR), may pose legal challenges like amending the Reserve Bank of India Act, 1934.
About:
Background: In June 2018, RBI announced setting up of a public credit registry. The move is based on the recommendations of a committee headed by Y.M. Deosthalee which submitted its report in April 2018.
Objective: It would be an information repository that collates all loan information of individuals and corporate borrowers.
Significance of establishing PCR:
Helping banks to distinguish between a bad and a good borrower and accordingly offer attractive interest rates to good borrowers and higher interest rates to bad borrowers.
Addressing information asymmetry, improving access to credit and strengthening the credit culture among consumers.
Addressing the bad loans problem facing the banking system, as corporate borrowers will be unable to lend from multiple banks without disclosing their existing debt.
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