One reason of the prevailing high default rates in Pakistan, bankers say is the non-availability of credit history of a loan-seeker. In the developed world, there are a number of independent credit bureaus working to collect credit data for financial institutions. “You can’t develop a big card market in a country if the banks are not willing to share information through an independent credit bureau,” says Saleemuddin Ahmad, Country Manager of the American Express.
One such effort, however, is in the offing. Tariq Nasim Jan, Managing Director of DataCheck (Pvt.) Ltd. says their system is ready and they are sorting out legal formalities with the State Bank of Pakistan. The DataCheck will provide online credit information to member banks who will keep feeding their default data into the system. “Yes, there is a willingness among a number of financial institutions to feed their information about their default portfolio in our database,” says Mr. Naseem Jan.
The Credit Information Bureau run by the State Bank of Pakistan has a very limited database as it mainly focuses on accounts worth above half a million rupees. There are about two million credit accounts in the country, but according to Mr. Jan, the number of accounts in the CIB database is “just about 50,000”.
The function of the credit bureau is different from a credit rating agency. A credit bureau only collects information provided by the members, and there is no value addition done by the company. This information is made available for sharing among the member banks. Once the bureau gets operational, the lending will become easy as everyone will have a facility to cross-check the rating of a person,” a card issuer who recently got a nod from his headquarters in this regard, said. As for the Citibank, “it will support such efforts if it is done in a transparent manner”.