Why India needs new ways to raise revenue

Non-bank lenders, considered crucial for helping further the cause of financial inclusion in India’s layered but burgeoning economy, want parity with their banking peers in accessing an exclusive database on large borrowers — for early stress warnings that should give financiers adequate lead time to deploy the defensive moat.The grouping that represents such lenders has written to the Reserve Bank of India (RBI) for full access to the Central Repository of Information on Large Credits, or CRILC, arguing that information on such accounts should strengthen the credit appraisal process and help enforce greater credit discipline among borrowers.“We urge the RBI to provide the NBFCs full access to the CRILC website,” the Finance Industry Development Council (FIDC) urged in the two-page letter to the regulator. “The measure will go a long way in further improving the vitality and viability of NBFCs by assisting in credit risk management.”CRILC is a borrower supervisory database that keeps records of loans of ₹5 crore and above. Banks that regularly feed in data to the large borrower repository have complete access to the data. Non-bank lenders that are mandated to report the relevant credit information every quarter don’t have access to the data on their own customers, or prospective customers, through the CRILC portal. 81317553FIDC said that access to CRILC will be helpful, particularly in areas of bad loan review, credit appraisal and underwriting, monitoring the credit discipline of borrowers and determining non-cooperative borrowers.It also suggested that access to the large borrower repository will help speed up the formation of the Joint Lenders Forum and the data could act as early warning signals relating to impending delinquencies, especially in the co-lending or joint lending segments.“If NBFCs are lending to the same borrowers as banks then they should be also given access to CRILC,” said Nachiket Naik, head of corporate lending at Arka Fincap, a Mumbai-based financier. “They are also contributing to it by way of payment track record of borrowers in their book.”Access to the database that provides data on repayments should help enhance credit discipline, a key regulatory goal in India’s complex financial industry that has significant state participation. “It may not be out of place to mention here that the credit discipline sought to be achieved by RBI will be further strengthened by providing access to the NBFCs to the CRILC site,” the FIDC note said.

from Economic Times https://ift.tt/3bgllRQ