To address the twin balance sheet problem of the banking sector and the corporate sector, the Reserve Bank of India (RBI) has strongly advocated setting up which institution in India?

Introduction / Context:
India has faced a twin balance sheet problem, where the balance sheets of both banks and large corporates become stressed due to high levels of non-performing assets and excessive leverage. In this context, the Reserve Bank of India proposed institutional solutions to improve credit information and reduce future build-up of bad loans. One major proposal was the creation of a centralised credit information repository.

Given Data / Assumptions:

• The question refers to a proposal of the Reserve Bank of India.
• The aim is to tackle the twin balance sheet problem in banks and borrowing firms.
• The solution involves setting up a central institution that keeps comprehensive credit data.
• Options contain similar sounding names: Public Credit Registration, Public Credit Registry, Public Credit Review and Public Credit Reminder.

Concept / Approach:
The idea behind the RBI initiative is to have a Public Credit Registry, a centralised and near real-time repository of all credit information on borrowers in India. This would include borrowings from banks, non-banking financial companies and other regulated entities. Such a registry improves transparency, helps lenders assess borrower risk more accurately, and reduces the chances of borrowers hiding their total indebtedness by borrowing from multiple institutions.

Step-by-Step Solution:
Step 1: Identify that the RBI proposal concerns a comprehensive credit information system.Step 2: Recall that the specific term used by RBI is “Public Credit Registry”.Step 3: Note that “registry” correctly describes a database or repository of information, which fits the intended function.Step 4: Examine the options carefully and match this with “Public Credit Registry”.Step 5: Select Public Credit Registry as the correct answer.

Verification / Alternative check:
RBI policy documents and committee reports, such as the report of the task force on Public Credit Registry, consistently use the term Public Credit Registry (PCR). Banking awareness notes summarise PCR as a single, extensive database to capture all material events for borrowers and to support better credit culture and supervision. There is no reference to an institution called Public Credit Registration, Review or Reminder, which confirms that Public Credit Registry is the accurate choice.

Why Other Options Are Wrong:

• Public Credit Registration: This phrase sounds similar but is not the official RBI term. Registration suggests a one-time process rather than an ongoing repository.
• Public Credit Review: Review refers to periodic assessments, not to a permanent registry of information.
• Public Credit Reminder: This option is clearly incorrect, as reminders have nothing to do with systemic resolution of balance sheet stress.

Common Pitfalls:
Because the options differ by only one word, candidates may be tricked by similar sounding names. The key is to recall the exact RBI terminology: Public Credit Registry, often abbreviated as PCR. Another pitfall is confusing PCR with existing credit information companies, such as CIBIL. PCR is meant to complement and enhance those systems by providing a universal, regulator-backed repository of credit data.

Final Answer:
To tackle the twin balance sheet problem, the RBI proposed setting up a Public Credit Registry in India.