Government Setup Credit Registry

The Union government has set up an information utility (IU) called National E-Governance Services. It is a credit registry, maintaining data on borrowing, default, and security interest of lending/borrowing transactions with banks and financial institutions. It provides data to authorised users on the present status of a borrower.

Commissioned by the Ministry of Corporate Affairs, the group was given the mandate to frame rules, regulations and by-laws for IUs besides eligibility norms for entities desirous of becoming an IU.

Once implemented, banks would be able do better enforcement of dues against borrowers.

Better credit monitoring would result in lower risk weights and reduce interest rates charged, besides recycling funds so that credit is available with high velocity.

For borrowers, the main benefits come in the form of reduced cost of capital, no unilateral action, and data on repayment will be tracked by the IU.

Access to credit increases, prompt repayment of loans by firms are recognised incentiivising risk taking by entrepreneurs.

A new set of professionals named Insolvency Professionals (IP) will come into being and they would be supervised by insolvency professional agencies (IPA). Adjudication would be done by the National Company Law Tribunal (NCLT) and the Debt Recovery Tribunal (DRT).