DMPQ: What are the uses of Public credit registry?(Economics)

It is an information repositorythat collates all loan information of individuals andcorporate borrowers. A credit repository helps banks distinguish between a bad and a good borrower andaccordingly offer attractive interest rates to good borrowers and higher interest rates to badborrowers.

The move is based on the recommendations of a committee, headed by Y.M.Deosthalee.PCR will address issues such as information asymmetry, improve access to credit andstrengthen the credit culture among consumers. It can also address the bad loan problemstaring at banks, as corporate debtors will not be able to borrow across banks withoutdisclosing existing debt.Setting up the PCR will help improve India’s rankings in the World Bank’s ease ofdoingbusiness index.

 

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