What Prevents State Registration of Credit Bureau?

Baku / 06.10.17 / Turan: The Credit Bureau, established on April 19 this year, has not yet passed the state registration. In banking circles they do not want to comment on the situation, while noting that there are problems on the way to creating a credit bureau that are not disclosed. In general, according to sources in banks, difficulties arose with the registration of the credit bureau, since it is not beneficial to certain forces.

"In November, it will be a year since the law on credit bureaus was passed. However, unfortunately, this institution is not yet involved, although there is no good reason. While we expect the work of this structure, it has not yet passed the state registration, and this is a technical point, since a legal basis has been created. And, for a long time banks have prepared the personnel base and worked out the necessary documentation for these purposes," the economist Samir Aliyev told Turan.

By the way, the creation of a credit bureau, whose activities could improve the system of information exchange on loans, is included in the strategic roadmap for the development of financial services and makes a priority in this document. "In brief, I note that this bill was prepared long ago. The credit bureau is entitled to collect information about the client base from banks, non-bank credit organizations, utilities and mobile service providers, as well as sellers who provide goods in installments. In a word, credit histories gather in one place, a base is created, which allows the bank to correctly assess the financial capabilities of the client," Aliyev said.

It is important to recall here that starting from 2005, this function was performed by the Centralized Credit Registry (CCR), but its information was limited to banks and NBCO. Credit bureaus will have more information. In addition, the CCR has a base within the financial system, and the credit bureau is able to provide services to all segments of the population. At least twice a year it is obliged to issue a personal credit history free of charge to the public on the basis of appeals. The creation of the CCR at first helped the banks to some extent resolve the issue of problem loans - the practice of a credit carousel was terminated when the client had the opportunity to borrow from several banks to cover the previous loan and thereby climbed into unpaid debts.

However, in the following time, the devaluation and irresponsible credit policy of banks gave rise to such problems that the CCR could not cope with. According to Aliyev, now banks are almost unable to issue loans, but are responsible borrowers guilty of the fact that banks have accumulated a lot of problems? "Due to inaction of the scoring system, the financial organizations rely solely on the official salary of the client. Only people who have officially high earnings can get money from them.

You can talk a lot about the advantages of a credit bureau. Difficulties in obtaining a loan do not mean unwillingness of banks to issue money; on the contrary, they would gladly lend to citizens, as they must pay their own debts, earn profits, pay salaries to employees and develop their own activities. Without a credit bureau, however, it is impossible to create a database of responsible borrowers.

By the way, from year to year, Azerbaijan's indicators on the availability of loans in Doing Business reports, compiled by the World Bank and the International Finance Corporation, are deteriorating. To improve the indicators, a legislative base has been created, however, postponing the implementation of the law "On Credit Bureaus" complicates the situation, although there is a presidential decree on the creation of this structure. Until the end of the year there is one quarter, and therefore, for the lack of specific actions in this direction, the solution of the problem will remain for the next year," he said.

In the meantime, according to official sources, preparations are currently underway to create the country's first private credit bureau, which is being formed with the support of the International Finance Corporation (IFC), which in fact, initiated the establishment of this institution in Azerbaijan. The Icelandic company Creditinfo was chosen as the technical partner in the creation of the financial novelty. Thus, the technical partner will become one of the shareholders of the bureau in the future and will take an active part in studying the principles of credit reporting and preparing the development strategy for the bureau.

Earlier it was reported that the bureau would be established with a capital of 2.2 million euros, 51% of participation in the capital will be provided by the operator (Creditinfo), and the remaining 49% - by local founders. "We help with the solution of organizational issues, working actively with the executive committee, and we are waiting for the opportunity when it will be possible to establish an office," said an IFC expert for the financial sector, Teimour Heybatov. -0-