Public credit registry better for SMEs: Acharya

New Delhi, Dec 17 (KNN) To smooth the loan flow to micro-businesses, the Reserve Bank prefers fundamental changes through a public credit registry rather than doling out forbearances, Deputy Governor of Reserve Bank of India Viral Acharya has said.

He said this while addressing IIT-Bombay’s annual Techfest.

“At RBI, we are quite excited about how we can solve the credit problems at the grassroots for micro entrepreneurs in a fundamental way rather than saying that when they default we will just give them forbearance and give them another six or nine months to pay up,” he said.

“We’ve not yet fully engaged with the government to get such legislation through because the Reserve Bank already has certain rights under the existing legislations,” he said.

“We are starting with where the legislative rights are already there with RBI,” he said, adding that work will happen parallelly on all other aspects, including creating a legislative framework and also taking care of technological changes.

Acharya said RBI is putting together a public credit registry that will give banks the entire profile, including past loan details, and also regular income flows of borrowers.

This can make a lender more confident and also reduce the rate of interest for a borrower as the risk assessment becomes easier, Acharya said.

He also said there is an urgent need to focus more on skilling, as it is a very important determinant for growth. 

Acharya said there is a need to judiciously allocate finance to entrepreneurs rather than just give away money.