2 December 2019 08:33 am
Sri Lanka’s Credit Information Bureau (CRIB) plans to release credit scores of banked citizens from January onwards.
“We have designed to give new space to the CRIB report by introducing a scoring system from January. This will give better information for lending institutions to make important decisions,” the Central Bank Deputy Governor, H. A. Karunaratne said.
CRIB was originally planning to introduce the credit scores last August. However, Karunaratne noted that the CRIB had to delay the initial plan as more efforts were needed to create awareness of the credit scores system among various stakeholders.
The credit scoring system will evaluate the credit worthiness or the probability of defaulting of citizens and firms, which would help the financial institutions, extend the lending facilities to their customers based on the credit scores, rather than relying on collaterals.
The credit scores will be calculated using an algorithm and it will range from 250 to 800. A low score would reflect a high probability of defaulting while a high score would reflect a low probability of defaulting.
CRIB expects the credit scores to increase access to finance for many creditworthy citizens and further, the citizens will also be able to demand lower interest rates for credit, based on their credit scores.
CRIB is also investing Rs.500 million in its three-year plan to switch to a new system by late 2020, which includes activating the non-financial (non-traditional) data module.
Once the new system is in place, the non-financial data, which includes water, electricity and telecommunication, would be incorporated into the credit reports and
credit scores.
CRIB has chosen Icelandic-origin Creditinfo International GmbH, which is incorporated in Germany and headquartered out of Prague, Czech Republic, as its technology partner, to assist with the score development and to develop the new system.
In addition, CRIB also plans to offer more value-added products to its customers as it moves to the new
system. (NF)