Role of a credit bureau is to collect and provide credit information to the lending institutions to manage their credit risk and facilitate distribution of credit to all the sectors in the economy. This includes government organizations, large corporate, micro, small & medium term enterprises, investors and individuals. This process will remove the obstacles of information asymmetries.
A credit bureau is an integral part of a risk management system of any country. Up-to-date information provided in a CBO’s credit information report (CIR) provides insight into the credit behavior of the borrowers and helps banks and financial institutions assess their existing and prospective borrowers rightly and quickly.
A credit bureau will help reduce the administrative cost in disbursement of credit and non-performing loan levels and thereby provide the credit facilities competitively at lower rates. In other words, information provided by a credit bureau helps lenders price the credit based on the risk involved.
Maintaining the confidentiality of the information of the borrowers and acquiring the cutting-edge technology for the same are very important. This will enhance the confidence of the borrowers on the credit bureau. CBO has taken all necessary steps to ensure the integrity of the system and issued Regulation (BM/REG/53/9/2011) to ensure the confidentiality of information and consumer protection. This Regulation was published in the official Gazette on 17- Dec-2011.