The Credit Information Bureau of Sri Lanka is aggressively pushing their credit score system which is expected to open up lending more broadly within society.
The scoring system which is currently operational will streamline decision making for lending institutions for smaller loans.
Director and General Manager of the Credit Information Bureau of Sri Lanka, Nandi Anthony said, “The main goal of CRIB is to ensure that credit is propagated to all corners of society. We have to ensure that credit goes to the most remote part of the country and that people who have never had access to credit also gain access.”
The implementation of the credit scoring system is a major driving force behind the pending improvement of Sri Lanka’s ease of doing business score.
The borrowers are expected to be able to negotiate better lending rates through the credit score system. They will also be able to use the score outside the lending system as reputational collateral.
The current lending system in the country uses asset ownership for the purpose of reputational collateral.
He said, “Through the information we provide we should create healthy portfolios for lending institutions.”
Anthony was speaking to LMD TV on November 11. The CRIB score system will be used to help the Central Bank measure system stability by looking at the quality of the lending portfolio on a dynamic basis of deposit-taking institutions.
A credit score is a number from 250 to 900. The number tries to encapsulate the risk level of an individual borrower comparative to other borrowers.
The CRIB will also establish a secured transaction registry.
This is a digital registry where movable items (e.g. machinery and stock) can be lodged and used as collateral. This will be enabled by the Secured Transaction Act to be shortly enacted.
He added, “the important fact about this is that it doesn’t speak about any history of any particular borrower.
It is just a number.”
A new CRIB system will be implemented in 2021 with higher connectivity and connectivity between banks ledgers and that of the CRIB. The CRIB is also looking to implement reports on credit allocation and terms for borrowers at each credit score.
The new system will collect telecommunications and utility billing data.
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