Legal And Regulatory Issues in Credit Bureau Development

Proceedings from the "Credit Bureau Development in South Asia", May 10-11, 2004, Colombo, Sri Lanka
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This presentation discusses the need for credit bureaus (CBs), their features and their regulation, focusing mainly on South Asia.

The presentation:

  • Sets out the various contexts that make a law is necessary for CBs;
  • Describes the history of the CB;
  • Emphasizes the many disadvantages of state owned/run CBs;
  • Details the importance of the public sector or central banks in the development of a credit reporting system;
  • Sets a target for CBs in South Asia and stresses that they should be:
    • Self-sustaining and profitable;
    • Privately owned;
    • Efficient and competitive;
    • Able to facilitate data collection and exchange, etc.;
  • Lists the following steps to an ideal credit system:
    • Remove central bank as shareholder;
    • Corporatize the CB;
    • Publicize the role of CBs and build public confidence in them;
  • Describes an enabling legal framework, suggesting its legal provisions, regulations that empower the Central Bank, its provisions for consumer protection, the need for flexibility, etc.;
  • Uses the United States 'Fair Credit Reporting Act' to illustrate its points;
  • Informs about consumer protection and the principles of fairness, privacy, accuracy and transparency;
  • Discusses various points about the information provided by CBs.

It concludes by highlighting the importance of a clear legal and regulatory framework; publicity and trust, consumer-rights, appropriate dispute resolution and reasonable penalties for non-compliance in the orderly development of a credit reporting system.