Financial Times

The Central Bank of Sri Lanka has express concern over bank and financial institutions not following mandatory reporting requirements in the provision of information on non-performing loans, the Credit Information Bureau of Sri Lanka (CRIB) said.

Dr Ranee Jayamaha, CRIB chairperson and Deputy Governor of the Central Bank, said in her annual review that it was an issue that concerned CRIB

“CRIB depends very heavily on accurate and timely information from its member institutions. One of the unsatisfactory features observed over the last so many years was the receipt of partial credit information from banks and financial institutions, particularly on non-performing advances. This has resulted in the Bureau not being able to provide a comprehensive credit profile of the borrower,” she said in the institution’s 2005 report.

The report said that to discourage the submission of inaccurate or partial information of borrowers, CRIB’s Board of Directors has decided to treat this non-compliance on the part of the lending institutions as an offence and compound such offences for a sum of Rs. 50,000 with effect from April, 2006.

“The lending institutions should also appreciate that the CRIB will not be able to maintain the quality and accuracy of information contained in credit reports due to the failure by some lending institutions/branches to update information monthly/quarterly as required by the Bureau. The importance of timely and accurate reporting has been reiterated by the CRIB throughout 2005,” it said.

Excerpts of Dr Jayamaha’s review:
The collection and collation of credit information of borrowers and release of credit reports to lending institutions have been the main functions of the bureau since its inception. Accordingly, all lending institutions are required to report both positive (Regular) information of Rs.500,000 and above and negative (Irregular) information of Rs.100,000 and above to the Bureau for processing of such information.

There is a demand from the financial services industry to receive information of credit defaults below these thresholds. However, the manual process that existed since its inception has constrained the processing of credit information at retail level. However, the Bureau has been able to accommodate one such request, i.e. collection and collation of credit card holders’ information through the maintenance of a separate database. Dissemination of retail level comprehensive information would be possible in the future when the CRIB is fully automated.

In 2005, a number of advancements were introduced to speed up the process of credit information and verification for accuracy. Instead of issuing fax and paper reports, information was disseminated to member institutions through a web-based process which resulted in expedient delivery of credit reports.