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 mandatory?
- 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.
(This article has been authored by the fintech and data teams at Ikigai Law. It originally appeared in the February edition of FinTales, our monthly fintech newsletter.)
Image credits: Pixabay
For more on the topic please reach out to us at contact@ikigailaw.com
