New Delhi, Nov 28 (KNN) Reserve Bank of India has recently announced a 10 member  High-level Task Force on Public Credit Registry for India  with leading experts from Banks, financial institutions and corporate experts. But it appears they have overlooked the need to include a representation from the Micro, Small and Medium Enterprises (MSMEs) / informal sector also.

As per the world bank definition,  a public credit registry  reports the number of individuals and firms with current information on repayment history, unpaid debts, or credit outstanding.

The number is expressed as a percentage of the adult population.

Incidentally, among the large economies, only China and Brazil operate  public credit registry with reasonable coverage of more than 75% of the population.

And surprisingly, leading economies like UK, USA and Germany practically has no public credit registry.

So, the endeavour of the RBI must be commended.

However, the moot point is, while credit information about the corporate sectors and the High Net Worth Individuals are reasonably available under different regulatory  framework, it is the MSME and informal sector who exist with credit information asymmetry.

And for this very sectors availability of credit  and credit servicing records are most crucial to avail formal institutional credit.

And it may be a theoretical issue that without  devising a method to capture the credit records  of the 6 crore plus MSMEs the coverage of the proposed credit registry will be simply dismal.

And here comes the need for an expert on MSME credit scenario. It must be remembered that barely 1% of the credit requirements of this sector is provided by the Banks and the rest comes from the informal sources; trade credit being the most significant.

How a committee constituted with experts who are not aware about the credit flow mechanism in the Clusters, the citadels of Indian MSMEs is any bodies guess.

It may also be mentioned here that the World Bank Group is already in cognisance of the problem and already launched a project to develop methodology for  capturing  the trade credit data of the MSME sector.

Reasonably they have taken FISME, the leading federation of Indian MSMEs, as partner  in the project.

Under the project valuable insights on feasible data points for trade credit information in MSME clusters have already been identified. (KNN/DB)