Credit info now a click away
Waiting for days, or even months, for obtaining credit reports on borrowers is going to be a history next month with the full automation of the Credit Information Bureau (CIB) of the Bangladesh Bank (BB).
Banks and financial institutions (FIs) now can get the mandatory reports on the borrowers concerned in a few minutes by logging on to the automated CIB.
“CIB automation will not only reduce time but also the cost of doing business,” said BB Governor Dr Atiur Rahman.
“Currently, data and report verification is being carried out,” said Rahman.
The automated CIB went into trial run in October last year after nearly two years of works. The full-fledged operation of the Bureau is set to begin next month.
The governor said the project is important for enlarging and upgrading the capacity of the CIB to sort, handle and deliver credit information to and from the banks and FIs in high and fast expanding volumes.
Bankers said the service deserves faster pace in the wake of expansion of lenders’ portfolios to numerous small and medium enterprises and farm loans in addition to the booming personal loans.
BB data show the CIB had a huge backlog of over 60,000 inquiries for credit information in early last year. The central bank under a “crash programme” removed the backlog in June that year, making the information updated.
“Getting credit information of prospective bank borrowers would take a few minutes instead of present five working days on completion of the project,” said the governor. It took two months a couple of years ago and both lenders and borrowers had to bear extra costs for the reports.
To deal with the problem, the BB appointed SouthAsia Enterprise Development Facility as consultant of the project, funded by UK Department for International Development (DFID), while Italian CRIF was appointed as the vendor to implement the project two years ago.
With the launch of the automated CIB, the service banks and non-bank financial institutions will be able to access the CIB database online, and get the credit reports of the borrowers concerned. The database will contain detailed information of individual borrowers, owners and guarantors.
“The online CIB will also minimise the extent of default loans,” said Rahman.
The rate of non-performing loans decreased to 14.71 percent in 2005 compared to more than 23 percent in the previous year. In 2000 the percentage of such loans was 34.9 percent, and now at a single digit level.
As the defaulters are not given any fresh loans, the banks and non-banks, before sanctioning any loan, will have to take clearance from the CIB that the applicant concerned is not a loan defaulter.
“The rate will further go down once the system is in operations,” said Jamilur Reza Chowdhury, an IT expert. He said the move would significantly reduce the time for obtaining a credit report.
A credit amounting to a minimum of $725 or Tk 50,000 comes under the provision for the reporting to the CIB, which was set up in August 1992 to improve the credit risk management and reduce default loans. World Bank funded the establishment of the bureau at that time.