ISLAMABAD: The National Assembly Standing Committee on Finance and Revenue expressed grave concerns over the unpreparedness of the Finance Ministry, the State Bank of Pakistan and the Credit Information Bureau (CIB) on the proposed amendment to the Credit Bureau Bill.
The NA committee, chaired by Omer Ayub Khan, met to consider the proposed Credit Bureau Bill, 2015.
Shaza Fatima Khawaja, Qaiser Ahmad Sheikh, Daniyal Aziz, Pervaiz Malik, Leila Khan, Nafisa Shah, Finance Secretary Dr Masood Waqar, SBP Deputy Governor Saeed Ahmad and others officials were present in the meeting.
During the clause-wise briefing on the said bill, both Finance Secretary Dr Masood Waqar and SBP Deputy Governor Saeed Ahmad were of the view that the objective of the Credit Bureau Act, 2010, was to provide a legal framework for emerging credit bureaus through an act of parliament.
They said that the law would provide for incorporation and functioning of private credit bureaus to help borrowers and lenders with an enabling interface of credit worthiness. They said that the bill would become a law after being cleared by both houses of parliament.
They opined that credit bureaus would be legally empowered to collect, and be answerable for trustworthiness of, credit information about debtors of banks, financial institutions, non-banking financing institutions (NBFIs), non-financial companies, modarabas, leasing companies, microfinance institutions, etc.
Moreover, both the dignitaries were of the view that credit bureaus in the world over play a critical role and have an impact on financial decision-making. They said that lending and investment assessments by financial institutions, particularly banks, were crucial elements for a healthy credit culture in the country. They said that credit bureaus would provide information for objective examination of the credit standing of the borrowers.
They observed that despite widespread consumer financing and leasing of essential goods and services over the last two decades, there had been no central bank-regulated credit bureau and credit rating information services agency, and added that the SBP-owned Credit Information Bureau (CIB) published only consumer credit history of defaulters of bank loans exceeding Rs 500, 000, that too only after repeated goading by the Supreme Court of Pakistan.
They further informed the committee that rapid growth in consumer lending has led to the creation of some private credit rating agencies, who started providing such information, mostly to commercial banks, NBFIs and telecom service providers, but their activities and the quality of information and credibility was a question mark for the central bank.
They observed that the proposed law would now regulate private credit bureaus and provide a comprehensive legal and regulatory framework for their incorporation and functioning.
They informed the committee that four companies – Datacheck (Pvt) Limited, News-VIS Credit Information Services (Pvt) Limited, ICIL/Pak BizInfo and Credit Chex (Pvt) Limited – were currently registered under the Credit Bureau Act; however, only one company – Datacheck (Pvt) Limited – was operating without any legal framework or regulatory requirements, which raised concerns for the State Bank of Pakistan, especially due to the sensitivity of banking information maintained by these bureaus.
They said that with the approval of the said bill, the SBP would be able to regulate credit bureau companies in the country.
However, on the questions raised by the members about the protection of consumers’ rights, dispute resolution mechanism as well as current paid-off capital of the four credit bureau companies and others, the CIB representatives and the SBP deputy governor were unable to satisfy the members.
At this, the members expressed their utmost displeasure over the unpreparedness of the Finance Ministry, the SBP and the CIB.
The members also expressed grave concerns over the clauses of the Credit Bureau Bill, 2015, and proposed to make amendments in the bill before the approval of the committee.
