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Kolkata: Whoever is a subscriber to the EPFO (Employees' Provident Fund Organisation) knows the importance of UAN or Universal Account Number. The UAN is a 12-digit number assigned to each EPFO subscriber for tracking and managing Employee Provident Fund (EPF) accounts. It is of immense significance since it is a single, central identifier to which all EPF accounts are connected. Or, think of PAN. Or, even Aadhaar. All these unique identifiers are of great use to both the administrator as well as the individual citizen.
Reserve Bank of India has recently mooted the idea of a unique borrower identifier. While delivering the keynote address at TransUnion CIBIL’s Credit Conference, M Rajeshwar Rao, deputy governor of RBI laid down the vision for such an identifier to improve performance of the credit information network in the country. “We must move towards a unique borrower identifier, which is secure, verifiable, and consistent across the system,” Rao said.
Supporting the deputy governor's contention, Siddarth Jain, CFO, MinEMI remarked, "“Right now, one reason why so many people face credit report errors is simply that there’s no single verified ID tying all their loans and cards together. Names, addresses, or old details often don’t match across banks and NBFCs, which creates gaps or duplicate entries." (MinEMI is a web app that harnesses AI to optimise EMI.) The concept of a unique borrower identifier was presented in the event as a tool to facilitate data consistency on various credit information platforms and improve credit data quality for lenders.
According to the current practice, credit information companies have to depend on lenders to provide them accurate borrower details. Reports of data duplication, data asymmetry and misreporting plague the credit information landscape and increase risks of inaccurate judgement by lenders, which cumulatively can tell on the asset quality of lenders. The RBI deputy governor emphasised the need for data freshness and data quality and said that the latter is "the bedrock of responsible lending". But he stopped short of mentioning any timeframe within which RBI would push for its implementation.
Rao also mooted the idea of introducing real time credit reporting. The information will flow from the lenders to the credit information companies. It will reflect in the creditworthiness of an individual without delay and will help lenders improve their assessment of a loan applicant. The current practice requires lenders to provide information to credit information companies once every fortnight. A move towards real-time or near-real-time updates will help improve the decision making of lenders, was Rao's argument.
