Public Credit Registry (PCR)?

Which of the following is correct about Public Credit Registry (PCR)?

a       The purpose of PCR is to manage the foreign exchange of India.
b       The purpose of PCR is to address the twin balance sheet problem of the banking sector and the corporate sector.
c       The purpose of PCR is to keep the records of government borrowings.
d       None of the above

Solution (b)

A Public Credit Registry (PCR) is an extensive database of credit information for India that is accessible to all stakeholders.

PCR was in news recently as Reserve Bank of India (RBI) has formed a 10-member ‘High Level Task Force on Public Credit Registry (PCR) for India’, chaired by Y M Deosthalee.

A PCR is set up by the central bank and reporting of loan details to the Registry by lenders and/or borrowers is mandated by law.

The Reserve Bank of India made a strong case for setting up a public credit registry in India to address the twin balance sheet problem of the banking sector and the corporate sector.

Public credit registry coverage reports the number of individuals and firms listed in a public credit registry with current information on repayment history, unpaid debts, or credit outstanding.

The repository can capture and certify details of collaterals, enable writing of contracts and prevent over-pledging of collateral by a borrower.

A PCR will help in

Credit assessment and pricing by banks;
Risk-based, dynamic and countercyclical provisioning at banks;
Supervision and early intervention by regulators;
Understanding if transmission of monetary policy is working, and if not, where are the bottlenecks; and,
How to restructure stressed bank credits effectively.
PCR is expected to enhance efficiency of the credit market, increase financial inclusion, improve ease of doing business and help control delinquencies.