What is a Credit Information Bureau/Credit Registry?
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 customers thus enabling them to make a more prudent decision.
What is Electronic Credit Information Bureau (eCIB) of State Bank of Pakistan?
The Electronic 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.
Who can be/are the members of CIB?
All Banks, Development Financial Institutions (DFIs), Non- Bank Financial Companies (NBFCs), and Micro Finance Banks operating in Pakistan are members of the CIB database. The membership with CIB, as per instructions of SBP, is mandatory for all Banks, Developmental Financial Institutions (DFIs) and Micro Finance Banks (MFBs) respectively. No financial institution can access the CIB database without obtaining membership of CIB of State Bank of Pakistan.
Is it mandatory for financial institutions to obtain Credit Information Report (CIR) of prospective and existing borrowers before extending any credit facility?
Yes. It is mandatory for banks to obtain CIR of their prospective and existing borrowers before extending/renewing any financial facility of Rs. 500,000 and above. However, before allowing any facility, the banks / DFIs shall preferably obtain credit report from the Consumer Credit Information Bureau of which they are a member. The report will be given due weight age while making credit decision.
How credit information is accumulated in CIB database?
All member financial institutions are required to submit entire borrowers’ records online to CIB on monthly basis. This information is submitted within a period of fortnight from the date of close of month.
How many types of reports can be generated from eCIB database and what sort of information these reports contained?
Two types of reports can be generated from eCIB system:
1. Consumer Credit Information Report
2. Corporate Credit Information Report
1. Consumer Credit Information Report:
All individuals and sole proprietors are placed under the category of “Consumer Borrower” and are reported against their unique identification codes (Computerized National Identity Card Numbers (CNIC) and Old National Identity Card Numbers where CNIC numbers are not available with financial institutions). The system also has the provision for consumer credit and default history for the last 12 months.
2. Corporate Credit Information Report:
Partnership concerns and corporate entities (both listed and unlisted) are categorized under “Corporate Borrower”. The system provides unique borrower code to each entity/concern. Member financial institutions are required to report all financial obligations under unique borrower code assigned to each entity/concern. The corporate credit information report contains details of outstanding liabilities (fund and non- fund based), position of overdue, details of litigation, write-offs, recoveries and rescheduling and restructuring.
Can a borrower prevent CIB from having his/her information from financial institution?
No. The CIB is legally empowered to collect credit information from its member financial institutions. The financial institutions are required to report entire credit records irrespective of any limit to CIB. The information in CIB database is shared on the basis of reciprocal sharing.
The financial institution that extracted CIR is not providing me with a copy. Can I get a copy of my CIR directly from CIB?
No. Presently, under the provision of law, only member financial institutions have online access to eCIB servers for generating CIR of borrowers for their internal use. The CIR is a confidential document and cannot be provided to borrowers.
Is there any regulation restricting financial institutions from lending to a borrower having negative CIR?
No SBP’s regulations/instructions place any restriction on banks and financial institutions on lending to any person/organization which has overdue appearing against its account in CIB or has a default history. The financial institutions have to make their own lending decision on the basis of their lending policies, past track record of borrower and his repayment capacity.
My credit application is turned down by a financial institution. Does it mean that I am not entitled to avail any credit facility from other financial institutions as well?
No. Negative credit Information Report (CIR) does not debar any individual from seeking any financing facility from any financial institutions in Pakistan. The financial institutions make lending decision on the basis of information available to them and in the light of their own lending policies, borrower’s total exposure, repayment track and capacity. If one financial institution rejects your credit request, it does not mean that all other financial institutions will also do the same.
Does the CIR provide a credit rating of the borrower? Does it reflect only negative information?
The credit information reports neither express any opinion about the borrower creditworthiness nor assign any rating to the borrowers. It provides factual position of the borrowers’ credit exposure both negative as well as positive as of certain date.
When I approach CIB for making any correction/change in my credit worthiness (CIR) report, why is the matter referred to financial institutions? Can CIB amend my CIR at my request?
The CIB does not amend any CIR at its own, on the request of borrower. The onus of reporting accurate data to the CIB rests with the reporting financial institution; hence CIB cannot verify the borrower’s claim at its end. Any correction in CIB data can only be made through the reporting financial institution.
If I settle my overdue liabilities today, how long will it take to clear my CIR?
The banks and financial institutions are required to make an online interim update of the borrowers’ record immediately but not later than 10 days from the date of settlement of overdue. The interim update statement reflects in “remarks” portion and overdue amount will subsequently be cleared in the reporting month to which it pertains. However, history such overdue will continue to be reflected for 12 month from the date of settlement.
How negative Credit Information Report (CIR) can be improved?
The CIR becomes negative due to erratic repayment behavior. The negative CIR report may either be due to some overdue outstanding liabilities or some written-off liabilities appearing against your record. The borrowers may contact with lending financial institutions and work out a repayment/settlement plan for settlement of overdue liabilities. Once loan account becomes regular, CIR will reflect the revised position. However, borrowers should take utmost care in timely repayment of outstanding liabilities in order to keep their track clean.
For how long default history continues to appear in the CIR?
In case of consumer borrower (individual), the CIB maintains the history of financial records of past twelve months. This means that if a borrower settles overdue/default liability with financial institutions, such default will continue to appear in CIR for the next 12 months from the date of settlement. However, his current status will be reported as regular.
Does the CIB take any punitive action against financial institutions reporting wrong information on any borrower?
Yes. The financial institutions are subject to penal actions under the provision of law on account of misreporting/erroneous reporting in eCIB database.
Is there any other Credit Bureau other than CIB operating in Pakistan?
Yes, there are four privately owned and managed credit bureaus operating in Pakistan:
1. Datacheck (Pvt.) Limited
2. News-VIS Credit Information Services (Pvt.) Limited.
3. ICIL/ PakBizInfo
4. Credit Chex (Pvt.) Limited
