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IFC plans to provide financial help to launch ‘Credit Bureau Scoring Cards’

ISLAMABAD — The International Finance Corporation (IFC) will provide considerable financial and technical support to help introduce “Credit Bureau Scoring Cards” aimed at enhancing increase access to loaning in Pakistan.

The IFC, a member of the World Bank Group, and DataCheck Pvt. Ltd., Pakistan’s leading private credit bureau yesterday launched the first credit bureau scoring system.

According to an announcement made here by IFC office, new credit bureau services provided by DataCheck will benefit Pakistan’s entire lending community.

The effort was led by IFC Advisory Services in the Middle East and North Africa PEP-MENA.

Dr. Shamshad Akhtar, Governor of the State Bank of Pakistan noted on the occasion that developing a sustainable and dynamic credit environment is key to a healthy economy, and that lenders need access to effective tools and methodologies to make better lending decisions and support the growth of Pakistan’s economy.

“We have taken an active role in developing the credit industry and are pleased that the private sector also recognises the importance of this field. We welcome new ideas and best practices from around the world that will help the industry grow in a profitable and sustainable manner,” she said.

Credit bureaus worldwide specialise in collecting information about the repayment behaviours of consumers and small businesses.

This information allows lenders to make more informed decisions about issuing loans, which helps improve access to finance, prevent over-indebtedness, and drive down the cost of borrowing.

The new bureau score cards are a major milestone for Pakistan’s consumer credit industry. For the first time, people have access to sophisticated risk analysis tools that are used typically in developed economies. Credit scores will help reduce the risk of lending and enhance the capacity of credit-granting organisations, making them more efficient and objective in processing loans. These tools will also help financial institutions comply with requirements under Basel II, said Tariq Jan, Managing Director of DataCheck.

The raw data that credit bureaus collect requires an expert eye for evaluation, and this poses a challenge in emerging markets, where there may be a limited number of experienced credit officers. Bureau scoring can assimilate raw credit data into a quantitative measure of risk, yielding a score that is easier to interpret.

The cooperation with DataCheck fits well with IFC’s strategy to introduce international best practices in developing credit bureaus, which facilitate greater access to financing for both individuals and small businesses, said Nadeem Siddiqui, IFC Resident Representative in Pakistan.

IFC, a member of the World Bank Group, fosters sustainable economic growth in developing countries by financing private sector investment, mobilising private capital in local and international financial markets, and providing advisory and risk mitigation services to businesses and governments.

IFCs vision is that poor people should have the opportunity to escape poverty and improve their lives.

In FY07, IFC committed $8.2 billion and mobilised an additional $3.9 billion through syndications and structured finance for 299 investments in 69 developing countries.

IFC also provided advisory services in 97 countries.