A set of questions about the purpose and form of the National Financial Information Registry.
In this year's budget speech, the Finance Minister announced plans to create the National Financial Information Registry (Registry). The Registry, according to the minister, would be a 'credit public infrastructure' meant to promote financial inclusion and stability. It's unclear how, though. The RBI Governor called the Registry a '360-degree kind of information system' which will expedite credit flows.
Little else is known about the Registry. So, when we tried to write an 'opinion piece' on the Registry, it was largely speculative. The only way to write about this development, we think, is to ask questions. Here are a few:
- Why do we need the Registry? How is it different from other
data repositories like credit bureaus (like Equifax and
CIBIL) and account aggregators (like Finvu and
Saafe)? What gap is it filling?
- Is the Registry another avatar of the 'Public Credit
Registry' – a credit information repository envisaged by
the RBI a few years ago? The RBI constituted a taskforce –
which submitted its report in 2018 – on setting-up public
credit registries in India. This registry was intended to provide a
comprehensive credit information repository – from loan
origination and pricing to defaults, monitoring, repayment.
- What 'financial and ancillary information' will be
stored in the Registry? Is it only credit information from lenders?
Or will it include other data points? If so, which ones?
- Whose data is covered – only individual borrowers or
businesses? Is it geared primarily towards MSMEs and
micro-entrepreneurs seeking credit?
- Who will provide this data to the Registry – banks,
NBFCs, and similar regulated entities? Or will unregulated tech
companies provide data as well? Is sharing this data
- Who can access the information stored in the Registry? Is
access contingent on borrowers' consent?
- Is the Registry at risk of becoming a honeypot of sensitive
data – a potential single point of failure? What safeguards
will be in place to prevent cyber-attacks and unauthorised access
(even from the government)?
Data is essential to lending. Of course, raw data alone isn't enough – a fintech's secret sauce is its data analytics and insights. Even so, the Registry could be valuable if it provides access to a wide dataset through a single window. For now, though, we wait for a few answers, before we can ask more questions, and then perhaps have an opinion.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.