What is Credit Information Bureau?
A Credit Information Bureau is an organization that collects and collates credit data on borrowers from its member financial institutions. The financial data is then aggregated in system and the resulting information (in the form of credit reports) is made available on request to contributing member financial institutions for the purposes of credit assessment, credit scoring and credit risk management. The major purpose of this database is to enable the financial institutions to know the credit history of their prospective and existing customers thus enabling them to make a more prudent decision.
Credit Information Bureau of State Bank of Pakistan (SBP):
The Credit Information Bureau (CIB) was established by State Bank of Pakistan (SBP) in December, 1992. The scope and activities of CIB are governed under the provisions of Banking Companies Ordinance (BCO), 1962. The Section 25(A) vests powers with SBP to call for credit information in such manner as it may deem necessary and make such information available to any banking company.
Role of Credit Information Bureau:
The CIB plays an important role in promoting financial discipline, better credit risk management and making prudent lending decisions. It is globally recognized that a well developed financial sector must have effective credit risk detection and management system to allocate credit efficiently. The CIB helps financial institutions in managing credit risk and assessing true credit worthiness of existing as well as prospective borrowers.
Electronic Credit Information Bureau (eCIB):
The very purpose of establishing a CIB at SBP was to promote sound credit culture, prudence and professionalism among financial institution. The services extended by the CIB have enabled banks and financial institutions to lend to new segments of market and helping in fraud and loss prevention and enabling the member financial institutions to improve their risk prediction and management process.
The scope and administration of CIB database was further enhanced in April, 2006 when a new look VPN based e-CIB system with enhanced features started its operations. The key features of new eCIB system included the followings:
- Separate Consumer/Corporate reports and data input formats
- Provisions for consumer credit and default history
- Improved efficiency in terms of speed, reliability & security of data
- Provisions for online amendments and Interim updates
- Record of credit inquiries made by the financial institutions
- Web based Help Desk for online queries and complaints
- Online technical support to the financial institutions
Confidentiality of information:
According to Banking Companies Ordinance, 1962 (BCO) the credit information is deemed as confidential and SBP while making such information available to its member financial institutions shall not disclose the names of institutions which are the original source of that information. At present only those banks and financial institutions, which are either regulated by Securities & Exchange Commission of Pakistan (SECP) or SBP are the members of eCIB database. The information in CIB database is currently being exchanged on reciprocity basis and every financial institution is required to submit its entire borrower records irrespective of any limit to the CIB database. The member financial institutions can only access limited information from CIB database for assessing credit worthiness of borrower. Disclosure to third party is strictly prohibited under the law. Thus individuals and corporate entities are not entitled to obtain their credit information reports.