The National Credit Reporting Act, signed into law on 30 May 2017, as a guide for better practice and operations in the Credit Bureau Industry, has strengthened the capacity of operators to deliver value for better access to credit and improve risk management.
Consequently, the law has extended the operation of Credit Bureaus to cover entities that are ordinarily outside the purview of the CBN, example, telephone companies, utility companies, retailers, corporate societies among others.
“The law covers both corporate and individuals, and give borrowers the right to access their data from the Credit Bureaus.”
Tunde Popoola, chairman, Credit Bureau Association of Nigeria (CBAN), and MD/CEO, CRC Credit Bureau speaking on developments in the industry said with its role in the economy, the value of loans granted in the country has risen from N7 trillion to N16trillion by December 2017.
Popoola also said there has been a significant decline in the rate of non-performing loans, while the number of borrowers in the credit reporting system has grown.
According to him, Credit Bureaus are agencies which collect and share information about the creditworthiness of individuals.
“We help reduce information asymmetry between lenders and borrowers thus helping lenders make informed lending decisions. Credit bureaus are also social institutions that shape behaviour that engender honouring business agreements and obligations, and also make possible the processing of tons of loan applications every day and in an automated manner.”
He further noted that credit bureau functions include, being a central repository of credit information. “This is of importance to lenders because the burden of storing large amount of data is taken off them.”
Popoola stated that individuals have greater access to loans now based on their good credit history. “This is particularly important to Micro, Small and Medium Scale Enterprises (MSMEs) who may not be able to meet the collateral and security demands of banks but have a good credit history.”
According to him, the Credit Bureau Association of Nigeria (CBAN) was set up in 2012 after three firms, Credit Bureau Ltd, CR Services Credit Bureau Plc, and XDS Credit Bureau Ltd, were licensed in 2008 to promote the development and use of credit reporting in Nigeria.
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