BB suggests formation of credit registry body in pvt sector

The central bank has suggested formation of a credit registry body in the private sector with information from utility service-providers and commercial organisations to get credit history of borrowers, officials said.
Globally, most countries have private sector credit registries which give more info about a probable borrower compared to credit information bureaus under central banks, they added.
The suggestion came in a report of a taskforce of Bangladesh Bank (BB), assigned to examine the possibility of formation of a credit registry body jointly by controlling ministries of utility service-providers and commercial organisations and bank and financial institutions.
This is a part of reform work-plan of the BB in its effort to ease business in the country. Private sector and foreign investors frequently allege that the procedure for starting business and running it in Bangladesh are very complicated.
The report said a private sector credit registry will include borrowers' credit information relating to bank and financial institutions, public court record, mortgage info, land ownership info, joint stock company-related info, bankruptcy-related info, and loan-related information.
The info private sector credit registries will provide is not available in the central bank-run credit registry.
The private sector credit registry organisations are being run commercially so that they can make information available as much as possible.
"Loan availability has to be made simpler to help an economy grow fast. To this regard, updated previous and accurate information of probable borrowers is needed," said the BB report.
It said credit history of almost all citizens is available in the United States. Dunn and Bradstreet Corporation is the top credit information provider which controls 90 per cent of its market.
Presently, in Bangladesh, the BB credit information bureau (CIB), formed in August 1992, collects credit info every three months about loans over Tk 50,000, and credit card loans over Tk 10,000 and updates it into database after cross-check. The information is being provided to the government on demand.
The BB report suggested that a private sector registry can incorporate information from utility service- providers, mortgage companies, credit card issuers, organisations which
sell products on credit, loan recovery organisations, various public bodies, telecom service providers, bank and financial institutions, micro-credit providers, brokerage houses, and court records.
The BB said a law has to be enacted before taking any step for establishing private sector credit registry. Entrepreneurs may not show interest in investing in setting up of a private sector credit registry in the absence of a legal framework.
Contacted over telephone Friday, former BB governor Dr Salehuddin Ahmed told the FE, there is a CIB in the central bank which possesses credit history of people from banks and financial institutions.
"But there is a necessity of a comprehensive credit registry incorporating credit information of people from all other arenas," he said.
Mr Ahmed, however, suggested caution in this case to avoid info manipulation. Otherwise, their information may not be acceptable to all.
He suggested consultation on the issue with all stakeholders before going forward to set up a credit registry in the private sector.
syful-islam@outlook.com