Viral V Acharya: Public Credit Registry (PCR) and Goods and Services Tax Network (GSTN) - giant strides to democratise and formalise credit in India

Speech by Dr Viral V Acharya, Deputy Governor of the Reserve Bank of India, at the Annual Global Banking Conference - FIBAC 2018, organised by the Federation of Indian Chambers of Commerce and Industry (FICCI) and the Indian Banks' Association (IBA), Mumbai, 20 August 2018.

The views expressed in this speech are those of the speaker and not the view of the BIS.

It is a pleasure to be with you all and share with you my thoughts on some recent developments that are expected to have transformative implications for our country. In particular, I wish to draw your attention to some major initiatives in gathering and analysing better credit data that can potentially have a huge impact in creating a financially healthy India.

It is a known fact that a large part of the Indian economy is informal. This year’s Economic Survey has given us an estimate, sourced in large part from the implementation of the Goods and Services Tax Network (GSTN). About 0.6 percent of firms – accounting for 38 percent of total turnover, 87 percent of exports, and 63 percent of GST² liability – are in what might be called the ‘hard core’ formal sector in the sense of being both in the tax and social security net. Estimates also suggest that the informal economy employs nearly 50 per cent of the workforce in India³. The earnings of some in the informal economy may be at par with their formal economy counterparts, but due to its informal nature, people and businesses in this part of the economy are rendered ‘invisible’ to the formal banking system. This ‘invisibility’ adversely affects their ability to grow current income level because of lack of access to formal credit.