GIA has expanded its areas of expertise into the field of credit information bureaus (CIBs). CIBs collect, verify,
store and disseminate credit information on individuals and companies and share it with creditors, thereby facilitating lending
decisions and helping separate good borrowers from bad borrowers. GIA provides guidance to overseas banks, financial
institutions and central banks in establishing CIBs.
The benefits of a CIB are increasingly recognized
in emerging markets where new CIBs are being created rapidly. In 1980 only one third of countries in the world had a
private bureau, a public registry or both. Today 80 percent do.
A partial list of the benefits of
a CIB would include the following:
Benefits to Lenders/Creditors
- A
CIB saves lenders time and money by offering them a broader scope of borrower data than they could develop on their own
- Transaction
costs, defaults and fraud are reduced, improving profitability
Benefits to Borrowers/Debtors
- A
CIB provides an incentive to borrowers to make timely payments and to keep their reputation in tact
- Information sharing
by creditors stimulates the competition for good borrowers over time, offering borrowers a choice of lenders and perhaps lower
interest rates.
Benefits to Regulators
- Asymmetric information
in the market is reduced and hence lending risks and fraud
- Bank supervision authorities can better analyze a financial
institution’s credit portfolio and get earlier warning of irregularities in loans or provisioning
Benefits to the Local Economy
- CIB information is a catalyst for growth. More rapid
financial decision making by lenders improves cash management, increases the volume of transactions, encourages consumer credit
products, and raises the velocity/turnover of money, all of which generate investment and broader economic activity
- Free
flowing information contributes to labor mobility and economic flexibility
GIA’s
role in the CIB field has several facets
- Undertaking feasibility studies to determine a country’s
readiness for a CIB, as we did in Afghanistan, Georgia, Iraq, Macedonia, and Tanzania.
- Drafting CIB legislation for
parliamentary consideration in Mongolia and Azerbaijan
- Advising regulators and central banks in Pakistan, Kosovo and
Egypt on how to expand or upgrade their existing CIBs to best practice status
- Creating action plans and business
plans to facilitate the establishment of a private-sector owned and operated CIB
- Evaluating existing CIBs according
to local market needs
- Speaking at international conferences, such as the First Credit Bureau Conference for FSU Countries,
May 2005, in Tbilisi, Georgia
GIA has direct access to the next step in creating a CIB—technical
experts who can ensure that the data collection, storage and dissemination are done quickly and confidentially. These experts
have worked in Southeastern Europe, the former Soviet Union, and Latin America.
Give GIA a call and let’s discuss creating or upgrading your credit information bureau.
