Reducing NPA in the market:

CRIB to bring credit scoring

Charumini de Silva

The Credit Information Bureau of Sri Lanka (CRIB) will introduce credit scoring to Sri Lanka soon. It is a rating given to all citizens based on their borrowing performance. If the rating is good, the benefits to the public from lending institutions and banks are also high such as preferential loans and preferential interest rates.

Through credit scoring every person is treated equally as each person has their own rating and if the credit performance is good everyone is privileged to get credit facilities with less trouble, Credit Information Bureau of Sri Lanka General Manager Gamini Karunaratne told Daily News Business.

He said the Central Bank has noticed that the incidence of cheques bouncing due to insufficient funds in accounts has increased and it has become a big problem for the banks. As cheque returns due to insufficient funds in the current account is legally enforceable, the CRIB will list people if their cheques are bounced three times due to insufficient funds.

Another step taken by the CRIB is to create a register for moveable assets such as machines, equipment, vehicles, the harvest and all others, so that the lenders become more secure. The aim of creating this register is protecting the lenders, he said.

The information provided by the CRIB will assist the financial institutions to take better decisions and those decisions will help to reduce the amount of Non Performing Advances (NPA).

The CRIB wants to minimize the bad debts in the credit market and for that the lending institutions and the banks has to have a close relationship with the CRIB, Karunaratne said.

The CRIB is where the information of good and bad credit, and the information of all the authorized lending institutions in the country are stored, but most people think that it is where only the bad credit users are listed. To dispel this myth and to create a more powerful awareness among the public, the CRIB will launch a public awareness program from November 2009, he said.

The CRIB has noticed that the usage of credit reports has increased recently.

A reason for this is that there is an increased credit growth in the country and the other reason is that the lending institutions are trying to be cautious in granting credit facilities. Therefore, the CRIB has now taken several steps to issue credit reports for the general public from December 2009.

With the implementation of this program, the public will benefit by obtaining credit reports once every six months.

Then the public will able to issue their credit information to the lending institutions and banks when they are in need of credit facilities, he said.

“We have done more than 80,000 credit reports by the end of September 2009.

The present average of issuing credit reports is over 4,000 per day and more than 60,000 credit reports are issued monthly by the CRIB,” he said.