Credit bureau and business information company CRIF S.p.A. officially launched its operations on Friday for the creation of the country’s first credit bureau.
The Central Bank of The Bahamas just completed the licensing process with CRIF early last month.
Guardian Business understands that at this stage CRIF has begun compiling data from various financial institutions, but it will be some time before consumers are able to access their credit reports.
Describing the credit environment in The Bahamas over the past few years as particularly “sluggish”, Deputy Prime Minister and Minister of Finance Peter Turnquest said in order for lending to resume at a less tentative pace, the information upon which lenders rely to provide credit has to improve.
“The establishment of a credit bureau will be an important and integral step toward an improved credit culture in The Bahamas. In order to function in a stable and sound system, it is important that financial institutions have reliable information on which to base their lending decisions and to safeguard the interests of depositors,” Turnquest said during the launch event at the British Colonial Hilton hotel on Friday.
“I want to encourage consumers likewise to embrace this development as it will ultimately lead to personal benefit in more access to and cheaper financing, the reliable and transparent granting of credit and overall improvements in personal and national financial health. They should know that the protection of their data is a paramount concern and all assurances have been given in this regard. The data protection commissioner is fully engaged and will be vigilant to ensure every possible safeguard is in place and observed.”
Turnquest said this new reform is an essential component for the nation’s financial system and is expected to add greater transparency to the process of providing credit to both businesses and households.
“It will help to inform judgements about the volume and cost of credit which borrowers should be entitled to and as a result, stimulate the expansion or granting of credit, thus empowering consumers and business entities alike,” he said.
“One of the objectives of the credit bureau is to ensure that more funding flows to those most deserving borrowers in our economy, while providing more informed justification for financial institutions to limit exposures to riskier prospects. This speaks to greater efficiency in the functioning of our credit markets and improved financial inclusion for many more persons and businesses, as the access and cost of credit should reflect the degree of assessed risk.”
A credit bureau collects data from various credit providers and is designed to help financial institutions make good decisions about who is credit worthy – whether they are a high risk, a low risk or a medium risk – and provides a complete picture of where people have debts across financial institutions.
“As I said earlier, this development will help protect the interest of borrowers as well, as it will eliminate a lot of the subjective decisions around credit approvals and pricing of financial products borrowers should be entitled to as a result of their credit scores and it will help reduce the present high non-performing loans on the books nationally, thus strengthening the overall financial system for both financial institutions as well as retail stores that offer financing options,” Turnquest said.
“More complete disclosures around the level of debt that households and businesses are carrying, as well transparency around track records in honoring past obligations, is also expected to encourage a measure of increased accountability and prudence in how financial affairs are conducted. This is a good outcome, especially in an environment where, on average, families need to build up higher financial net worth.”