With measures such as the Public Credit Registry (PCR) or recent norms on the proposed Account Aggregator (AA) ecosystem, the ultimate aim of the Government is to make sure that everybody has a digital footprint, believes industry officials.

According to Yadvendra Tyagi, EnKash‘s cofounder, a holistic view of the borrowers helps a lender in making a decision, and that’s where measures such as PCR can help immensely.

Public credit registry (PCR) – being pushed by the Reserve Bank of India is aimed at capturing the details of all borrowers and willful defaulters. Measures such as PCR can significantly catalyse the financial inclusion of country’s MSME, which currently are plagued with working capital issues, underlined Tyagi, adding timely availability of working capital continues to be its biggest Achilles heel.

While speaking at an ETRise Dialogues panel discussion in Mumbai on ‘Overcoming challenges regarding land, labour and capital’, the fintech’s chief highlighted that the government, going forward, wants to make sure that more MSMEs join the financial bandwagon.

Flagging the high level of informal lending prevalent in the sector, he said, “Half of the lending or the money raised today is invisible. If I am an MSME, probably by the time I realise I need capital and apply for a loan, and by the time I get a loan, my requirement is gone. Practically, that’s what is happening on the ground,” Tyagi pointed out.

According to Tyagi, this catch 22 situation leaves MSMEs to resort to loans from friends/ family and other channels of informal lending –an option that comes at a much higher cost.

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“By pushing measures such as PCR and AA, and even GST, what the government is trying to do is to bring everybody together into the financial fold; to enhance their financial footprints so that it becomes easier for them to raise funds from formal sources of finances, including banks and fintechs at a much of affordable cost,” he added.

Urging MSMEs to shun paper-based model to carry out their operations and opt for a digital one, he said, it’s time, country’s MSMEs should understand that if they continue operating as per their traditional approach, banks and NBFCs would find it difficult to lend.

Asked if he considers CIBIL to be the all-important criteria for borrowing decisions, he pointed out while the much popular system plays a role in credit underwriting, it remains a personal data, and not one with industry-wide scope.

“How many of Indian companies are registered in the CIBIL that have a good score”, he asked, adding, companies generally use a promoter(s) CIBIL score and hence to change the status quo, PCR is a good step in the right direction.

According to the government, PCR will collate the borrowing history of both individuals and corporate borrowers from multiple sources, including CIBIL. Such an approach will offer a more holistic view of both existing and new borrowers to financial institutions, enabling their lending decisions, the government says.





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