BDB head: Credit bureau long overdue
The Bahamas Development Bank’s (BDB) managing director has welcomed the potential establishment of a credit bureau in The Bahamas, stating that the initiative is “long overdue” ahead of educational initiatives between the BDB and The Central Bank.
BDB Managing Director Arinthia Komolafe told Guardian Business that the 90-day public consultation of the draft Credit Reporting Bill and Regulations (CRBR), which calls for the creation of a credit bureau, would benefit the country’s financial institutions by improving credit risk management, transparency and disclosure by assisting banks’ credit assessments of their customers.
“It is a positive thing, a good initiative that is long overdue. It is groundbreaking legislation that requires a paradigm shift by our customers.
“It will equip us with provisions and mechanisms that can benefit financial institutions and the country as a whole and improve the state of affairs of the average borrower in the country,” said Komolafe, noting that many bank clients with good credit history were also penalized under the current credit infrastructure.
Komolafe revealed that the BDB had recently met with The Central Bank regarding the draft bill, and was engaged in discussions with The
Central Bank and the Bahamas Mortgage Corporation (BMC) to rollout education programs for the organizations’ clients and the general public.
The educational initiative, which is currently slated to begin in November, will focus on the provisions of the CRBR and the Credit Bureau, as well as advising customers of their rights regarding personal information.
“We’re going to be educating them about the structure of the bureau itself and the types of information that can be extracted from various persons requesting information from bureau,” stated Komolafe.
The public consultation of the draft bill follows announcements that commercial banks had over $1 billion in outstanding loans by the end of July 2014, and $463 million in write-offs between 2009 and 2013.
Komolafe also suggested that the bill and subsequent credit bureau would increase the BDB’s credibility.
“The bureau will bring additional credibility to BDB’s operations and eliminate the stigma that it caters to political patronage,” said Komolafe, adding that the BDB had recently been listed as a mandated institution for participating in the Credit Bureau after Central Bank considered BDB’s request.
In a statement issued last month, the Clearing Banks Association of The Bahamas (CBA) voiced its support of establishing a credit bureau, stating that the initiative was “long anticipated”.
“The Clearing Banks Association (CBA) welcomes the establishment of a local credit bureau,” the statement reads. “This initiative is one that has been long anticipated and our member banks will fully cooperate with the regulators to facilitate its creation and commencement.”