Credit information system up and running by next month


23-February-2012

Ms AbelThis Credit Information System (CIS) which is to be set up by the Central Bank of Seychelles (CBS) also exists in other countries and the initiative has been welcomed by financial institutions.

In a press conference at the CBS earlier this week, First Deputy Governor Caroline Abel said this system will be a platform where financial institutions which give loans, including the Development Bank of Seychelles, the Seychelles Credit Union and the Housing Finance Company, will be able to assess prospective clients.

“This will give these institutions an idea on how clients across the financial system are paying their loans and if they are good or bad borrowers,” she said.

She added it will help promote financial discipline whereby credit risk will be better managed.
“The CIS will also serve as an incentive for clients to maintain good financial relationships with financial institutions.

“And the availability of information on clients’ credit history will allow banks to price loans on the basis of risk to the benefit of clients with good risk profiles,” she said.

Ms Abel added that at present a client can take a loan from several banks and no assessment is done as there is no system in place.

“The CIS will give the lending institutions the necessary information to better decide whether to give a loan to a potential borrower or reject the demand,” she said.

“This tool will give them (the lending institutions) first-hand information on how a client is paying a loan or other loans with any other banks.”

She said the ability to detect risk is also vital to the development of a financial sector as it allows for efficient allocation of credit.

“Apart from the system any financial institution can also question a client and use its discretion to give a loan in spite of the person’s credit history.”

But all institutions must access the CIS before giving any loans, she said.
Ms Abel said these lending institutions will be able to have access to the CIS for credit assessment only and if there is any evidence that the system is being used for other purposes, those at fault will be penalised.

She added that all information submitted to the CIS will be confidential and there will be clear guidelines on its use.
“When the platform will be up and running, members of the public will be given more details.”

Ms Abel said clients may also check information about their credit history to see if they are genuine.

In a press release from the CBS it is stated that the activities for those who have access to the CIS will be regulated by the CBS (Credit Information System) Regulations, which is expected to be gazetted early this year.

“Amendments have been made to the CBS Act 2004 and Financial Institutions Act 2004 in order for the CIS to function within the CBS and also to allow for the sharing of information.

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