Public Credit Registry (PCR)
One of the key requirement to get credit is, to have a strong data of past financial transactions.
Big firms, maintain a separate department for financial records.
Whereas most of Micro or small buisness almost don’t even maintain a formal accounting ledger in most cases.
In that case, Banks will be reluctant to provide loans, Assuming risk of such customers. Banks tend to provide loans at higher interest. Which is tough for small or Micro buisness owners to pay back.
There is no financial data of Micro/small buisness for the banks to make data-driven decision. This need to be addressed
Public Credit Registry is said to address the problem of data unavailability.
What is Public Credit Registry (PCR)?
A Public Credit Registry (PCR) is an information repository where all information about existing as well as new borrowers is stored. PCR is expected to launch by 2022.
But in India there are already four credit bureaus, that collect data. Namely Credit information Bureau India limited (CIBIL), Central Repository of information on large credits (CRISIL). But they all are Private Credit Bureau (PCB). A Public Credit Registry, is a non-profit entity under Reserve Bank of India (RBI), and therefore brings more comprehensive data coverage, from the largest to smallest borrowers. Data could be made available to stakeholders on a need-to-know basis and that data privacy would be protected at all times. One way PCR will be better than PCB is it can collect data from all possible sources like banks, Non-banking finance companies, public utilities and so on.
Its purpose is to prevent someone from taking the same loan from 2 different LSPs on the same invoice