* The head of the bank warns that the past is coming back to bite
* Industry will escape “dangerous waters”
* Start of reporting likely after Q2 2021
By NEIL HARTNELL
Editor-in-chief of the Tribune
Up to 30% of Bahamian borrowers will find it difficult to obtain loans due to the imminent arrival of the country’s very first credit bureau, warns a top banker.
Kenrick Brathwaite, chairman of the Clearing Banks Association, told Tribune Business that nearly a third may see their ability to access new credit curtailed as past failures to disclose existing debts will come back to haunt them.
For the credit bureau, which Central Bank Governor John Rolle says will begin publishing its first reports by the start of the second quarter of 2021, will be able to provide all commercial banks and other lenders with a full picture of a potential borrower’s history – including whether they already have too much debt and have defaulted on past loans.
Alerting Bahamians that they will no longer be able to switch from one bank to another, hiding the history of missed payments as they go, M. takes a full picture of a loan seeker’s creditworthiness.
Suggesting that nearly one in three Bahamians could be negatively affected if they did not change their habits, the chairman of the Clearing Banks Association (CBA) told this newspaper: “I would say at least 20% to 30% of borrowers who borrow today do not provide full information to the bank.
“I would say 20-30% will be affected by the credit bureau, and that’s a lot. The credit bureau will introduce items that banks have never had a chance to verify. We have never had the opportunity to check if you pay your rent, your utility bills on time. Tell us the truth about what you already owe.
“All of these things will be put into one document. It will generally be good for the Bahamas to introduce the credit bureau. It is a necessary thing and has been on the table for some time.”
CRIF SpA, headquartered in Italy and providing such services in 30 countries in the Caribbean, Europe, North America, Africa and Asia, was ultimately selected as the preferred bidder to operate the office. credit at the end of 2018 and finally completed the Bank’s Licensing Process at the end of 2019.
It now collects information from credit institutions mandated to provide it with all the details on existing borrowers, including their profiles and credit history, by the Credit Reporting Act in order to eventually provide all credit institutions with the information that will allow them to properly assess a the creditworthiness of the loan applicant.
Those required to provide information include commercial banks, insurance companies, credit unions, financial and corporate service providers, Bahamas Mortgage Corporation, and Bahamas Development Bank. Others that are likely to be added in the future are utilities, car dealerships and furniture stores that extend credit to customers, and even government revenue agencies.
Mr Rolle said last week that the credit bureau would give a significant boost by establishing transparency around the creditworthiness of all borrowers. “The bureau’s credit information reports will help reduce uncertainties about the quality of potential borrowers, improving medium and long-term access to credit for businesses and individuals,” he said.
The bureau, which was licensed in late 2019, is in the process of setting up operations and is expected to start producing live personal credit report data by the start of the second quarter of 2021. Commercial credit reports will start to be generated in a later phase of operations. “
However, Gowon Bowe, managing director of Fidelity Bank (Bahamas), who sits on the credit bureau’s implementation oversight committee, yesterday called the second-quarter 2021 schedule given by Mr. Rolle for the launch of the reports to be launched. borrowers’ credit as “optimistic”.
He added that this was when the “sample report and information gathering” would begin, explaining: “I think what is expected is that the form and format of the report are expected in the second quarter, then the information that is going to be gathered by key reporters will start to arrive. This schedule is not used as a final credit report for an individual. “
Mr Brathwaite, while acknowledging that it would take time for consumers and commercial banks to adjust to the new environment created by the credit bureau, said this should benefit those with good repayment histories while at the same time enabling lenders to improve the quality of the loan portfolio and to minimize the risks associated with delinquent and delinquent loans.
“It will be a good boost, especially for unsecured credit,” he told Tribune Business. “We are operating in dangerous waters because we don’t know anyone’s real extent in terms of existing debt service levels.
“It will be an adjustment because Bahamians are used to walking into a bank and telling them what they want to tell them, and leaving out things like utility payments. Do you have any arrears on your bill? Are you paying your rent on time? All of these things will factor into the credit score. “
But, while banks will have “a good grasp” of borrower creditworthiness and “be in better shape,” Brathwaite added that a credit bureau effect will likely be that “the pool of eligible borrowers will be larger. small”.
“It’s a two-edged sword,” he explained. “Most banks will choose to have good quality loans rather than having a lot of loans with high delinquencies. If your modus operandi is growth by quantity, you will have a greater challenge. If your strategic plan is to build by quality, you will love it. We have banks that generate profits by volume and banks that generate profits by quality. “
Likewise, Mr Brathwaite said Bahamians with good credit scores will have better access to cheap loans than their counterparts who have regularly defaulted or missed payments.
“People will say that it is better to have a credit bureau for a country because you have better opportunities to access credit and a better opportunity to assess people who apply for loans,” he said. added. “It’s good and it gives people the opportunity to improve their grades.
“These people with good credit scores, the flip side is that there will be more for them. Those people who have good credit scores will love it. These people who have challenges in the industry who have challenges, they don’t go like that. They will have difficulty obtaining financing.