Banking
Now is the time to set the record straight using the CRIB : Gamini Karunaratne
View(s):Credit Information Bureau of Sri Lanka (CRIB)is the first Credit Bureau in the South Asian region. It was established by the Credit Information Bureau of Sri Lanka Act No. 18 of 1990, an initiative of the Central Bank of Sri Lanka and the Ministry of Finance where CRIB was a response to the 1980′s debt crisis in the country.
CRIB Director/ General Manager Gamini Karunaratne
The disciplining mechanism provided by a Credit Information Bureau is expected to improve the country’s overall credit culture. Following are the excerpts of an interview held with CRIB Director/ General Manager Gamini Karunaratne.
Can you explain the objective behind CRIB?
CRIB is a public-private partnership, with the Central Bank holding the majority of equity while the rest is held by lending institutions regulated by the Central Bank.Our mission is to collect and collate, trade, credit and financial information on borrowers and prospective borrowers of lending institutions, to provide credit information, on request, to lending institutions who are shareholders of the bureau and simultaneously to borrowers and prospective borrowers to whom such information relate, to establish a credit rating system in Sri Lanka, to undertake credit rating and to sell such credit ratings to any foreign and local agencies, or to any person making a request for such ratings, and to undertake research projects for lending institutions who are shareholders of the bureau.
What is the importance of CRIB to Sri Lanka?
The importance of this institution is immense for the financial industry in Sri Lanka where it keeps the non performing advance ratio under control. Sri Lanka is among the few countries to have such system in place. As soon as an application is submitted to borrow, the financial houses seek information from us to know more about the borrower. We maintain a database about his past, his responsibilities, and how he has kept his promise in the past.
Before CRIB was formed banks used to write to each other and ask for opinion. This is cumbersome process that took time. Now you can immediately provide the facility provided he meets the requirements of the bank and with the good credit report. Speed has come into fund dispensing and security. Lending institutions heaviliy depend on our database as a rich information source..
Apart from the lenders what is the benefit the borrowers get?
As for the borrower also benefits from this where bank can no longer turndown an application on the basis he has a bad credit report. With the amendments introduced to the Act, public can access their own report and evaluate where they stand. If you have a bad report with habitual delays and late payment, now is the time to set the record straight using the CRIB. This helps people to become disciplined borrowers.The usage of the CRIB report has also increased compared to the times we started the service. We provide authentic picture about an individual where CRIB reports are called for visa purposes as well as at employment interviews.
Apart from providing background information on creditors, what are your future plans?
We are also looking at allowing public to have access to their credit report online.. Along with the symposium we will launch this.. Once the individual registered at the burea to avail this service, using that credentials he/she can have access to the CRIB subjected to a minimal payment channeled through a payment gateway. Next year we will provide one free report every year.Next step will be to have the utility companies including electricity board, water board and the telecom to have their record with the CRIB. This data base will also help the public if they meet their payments they can build up reputational collateral and the banks can trust him with a small loan. This is the same scheme brought in by several banks in other parts of the world to grant credit to underserved segments of the economy.
What is the symposium you mentioned?
Compliance Officers Symposium will be held on 15th November 2012. There are 93 stakeholders that include all banks, finance houses, and leasing companies in the country. Each stakeholder has a compliance officer who we are dealing with. So, during the symposium they all will come under one roof. This year the keynote speck will be the CEO of credit bureau in Thailand followed some local and foreign experts.
Can you include other transactions such as land and vehicle mortgages in CRIB?
Secured Transactions Register is another area we introduced last year. Banks like to take immovable assets as collaterals or securities. Movable assets are not in choice at most times. Similar to the Land Registry, the banks and the other lenders can register the transactions related to movable assets in the Secured Transactions Register (STR) . The proposal for a Secured Transactions Register was introduced by the ADB many years ago. In 2009 the respective Act was passed and in 2011 August the STR was inaugurated. The Act is not that strong so we are also ready exploring the possibilities to amend where more teeth will be given to the lender. SME can thrive from Secured Transactions Register in the event they seek facilities.
How secure is your CRIB database and can this be hacked?
We maintain a state-of-the-art systems infrastructure supported by industy’r proven technologies and best practices both in information security and business application management. . We do periodical vulnerability and penetration assessments with experts in the feild. We are satisfied of the security precautions taken. We developed the software for STR in-house. World Bank recognized as one of the best in the world and we showcased it in Brazil and Malaysia. Two other countries wanted it be implemented there and wanted to by this particular software. Since we are not into software business, the Board decided not.
Why not develop this system into a complete data base where points will be introduced?
We call it credit score. It is on our cards. But now is not the time to have that stringent measure. Perhaps in 2013 we will consider this.
Why do you say the STR Act is not strong?
This Act has kept out the most popular and the biggest movable asset, which is none other than the motor vehicles. It will be mandatory to register motor vehicle transactions with the particular amendment is made. All leneders will have to register moveable assets once Act is amended.
Follow @timesonlinelk
Related Posts:
RAM Ratings Lanka reaffirms rating for StanChart local branchRAM Ratings Lanka has reaffirmed the respective long-and short-term financial institution ratings of Standard Chartered Bank - Sri Lanka Branch ...
Banks must change business model:MTI CEOMTI Banks and financial institutions, constrained by the new 18 per cent credit ceiling, would be forced to re-examine their ...
Paradox of high reserves and continued foreign borrowingThe state of external finances of the country could be confusing. We are repeatedly told by the Central Bank, the ...
Banks eye commercial not consumer loansA Central Bank (CB) policy decision to limit loans this year has had a direct impact on the people though ...
RAM reaffirms Commercial Bank ratingsRAM Ratings Lanka has reaffirmed Commercial Bank of Ceylon (COMB)'s long- and short-term financial institution ratings at AA+ and P1, ...