CREDIT REPORTING CRITICAL TO SOCIAL ACCOUNTABILITY AND ECONOMIC PRODUCTIVITY - AYEDUN
By Babajide Komolafe
Credit reporting is critical to achieving social accountability and increasing economic productivity says Taiwo Ayedun
'Credit reporting increases social accountability by enabling faster building of trust in economic transactions. It enables two parties, who may be perfect strangers, to trust each other and engage in mutually advantageous business, and hence enables economic expansion and wealth creation', said Ayedun, who is the Managing Director/Chief Executive, CR Services (credit bureau).
'By so doing credit reporting allows more credit to flow to businesses and consumers. It leads to increased consumer spending, Increased sales and economic activities, Increased production and productivity, Increased employment generation and increased gross domestic product (GDP). .
He spoke on the Importance of Credit Reporting in the Banking Industry, at an international conference on Customer Due Diligence organised by Committee of Chief Compliance Officers of Bank in Nigeria (CCCOBIN),
He explained that credit reporting is the exchange of permissible information on borrower performance and repayment behaviour. The information collected include name, address, phone number, National ID, lender, loan amount, loan date, performance status of borrowers.
These information, he said are sourced lenders (banks), insurance companies, landlords, bankruptcy records, court judgments, and they are used to determine reputation, and to take decisions on applications for bank loan, insurance, apartment rental, utility, post-paid phone service.
He said that credit bureaus are the organisations licensed to collect and maintain credit information for the mutual benefit of: creditors namely Deposit Money Banks, Primary Mortgage Institutions, Microfinance Banks, Finance Companies, Leasing Companies, Telcos, Utilities, Landlords, and the credit Industry.
He explained how credit bureaus act as social accountability mechanisms that guide people's sense of right and wrong behaviour, work to reward good behaviour while punishing bad behaviour and protects against deliberate deliberation.
He mentioned this in reference to serial defaulters who prey on uninformed/unsuspecting bankers. He explained how CR Services had gone a step further by integrating anti-fraud biometric technology into the credit bureau system to enable banks effectively identify their customers and combat identity fraud.
Speaking further, he noted that credit bureau is probably one of the most important institutions to the economy of a country yet is one of the most under-appreciated.
Mr. Ayedun encouraged the Compliance Officers to ensure their banks fully comply with the CBN Circular which requires banks to obtain credit report from at least two credit bureaus before granting any facility to their customers and to obtain quarterly credit report from at least two credit bureaus for all previous loans/facilities granted to enable the determination of borrowers' exposure to the financial system.
On the ability of CR Services Credit Bureau to meet the demands of the market, Mr Ayedun noted that the company continues to deliver innovative products to the market including the detailed Credit Report which shows a borrower's payment history and the Portfolio Monitoring Report which allows banks to proactively monitor the exposure and performance of their borrowers relative to the entire financial system.