CRIB undergoes reforms with a new points system
The government is now set to reform the Credit Information Bureau (CRIB) with a points system for borrowers, instead of branding customers as bad borrowers, State Minister for Finance Ajith Nivard Cabraal told the Sunday Times.
The aim is to classify borrowers who used to service their debts without defaulting and allow them to get further banking facilities by considering their track record, he said.
This decision was taken at a recent meeting with bank officials and the General Manager of the CRIB Nandi Anthony has already been entrusted with the task of making necessary changes in the system, he added.
It will introduce a new phase to the CRIB report with a points system soon, he revealed.
According to available data, the CRIB currently covers 46.5 per cent of the country’s adult population, which includes 6.3 million people and over 212,000 firms.
This figure is expected to significantly increase with the expansion of data from non-financial institutions soon.
The new system will provide better information for banks and financial institutions to take informed decisions on borrowers with a clear understanding on good customers, he explained.
These financial institutions will have to adjust their credit disbursing calculations; he said adding that it makes the duties of credit managers and officers easier.
If customers pay dues on time they get a high credit score and if they don’t pay dues on time you get a low credit score, he pointed out.
The credit points system will influence the decisions of financial institutes in offering attractive rates for creditworthy customers, he said.
It will evaluate the creditworthiness or the probability of defaulting of individuals and firms assisting the financial institutions to provide loan facilities to their customers based on the credit scores, rather than relying on collaterals.
CRIB will be implementing a plan to switch to a new system soon, which includes activating the non-financial (non-traditional) data module.
The new credit bureau system will also provide businesses outside the financial services sector, such as telecommunications and utilities like electricity and water with access to consumer credit and risk information.
This is allowing businesses to identify which customers are creditworthy, and those which may be likely to default on any credit payment plan, CRIB sources revealed.
The credit managers and officers of financial institutions should consider a case by case basis in granting loan facilities as the individual credit score is generated based purely on the repayments of formal borrowings available to CRIB, Minister Cabraal said.
However the credit scoring system assures the creditworthiness of worthy customers and firms to persuade the financial institutions to extend the loan facilities without depending on collaterals, he pointed out.