The bill will address the issues faced by citizens in getting loans.
To fulfil all the desires in our lives, be it a home or car, we need loans. Getting loans from banks has become much easier than before with the advent of digitalisation. However, some citizens often face difficulties in getting loans easily due to multiple reasons. The Reserve Bank of India (RBI) has drafted a bill to set up the National Financial Information Registry (NFIR). Its purpose is to increase access to loans for people and make them affordable, Economic Affairs Secretary Ajay Seth said.
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Seth said that in the meeting of the Financial Stability and Development Council in September 2022, Finance Minister Nirmala Sitharaman discussed the proposal to set up a debt collector (repository). Seth told PTI, after the Budget 2023 was announced, that the Reserve Bank of India has already prepared a draft of the bill, which is currently being considered.
What is NFIR?
The purpose of setting up the National Financial Information Registry (NFIR) is to create a public infrastructure for loan-related information. NFIR will provide correct information to the lending agencies. A National Financial Information Registry would serve as a central repository of financial and ancillary information.
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In her first budget speech, Sitharaman said that NFIR would help in easy lending, increase financial inclusion and promote financial stability. Seth said that apart from having information about loans, the proposed NFIR would also hold ancillary information like tax payments and power consumption trends.
He said that if the lender does not have enough information, it will create risk and thus the interest rate will increase. On the other hand, if the risks are well understood, the loan can be availed at a better price. He said the proposed entity would help in the fair pricing of loans and reduce the risk for all stakeholders.
