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The Sultanate needs to have a reputable and credible credit bureau to expand the lending businesses to ease loan approval procedures. The proposal made by Tanfeedh Labs suggests that the bureau be run by the private sector should be under the supervision of government entities to enhance trust. “A credit bureau is an essential element to a country’s financial infrastructure”, says the proposal. The key stake holders, according to the proposal, should include the Central Bank of Oman (CBO), Ministries of Finance, Manpower and Housing, Capital Market Authority (CMA), Royal Oman Police and financial institutions.
According to Tanfeedh, the Government of Oman should partner with international credit bureaus to speed up its implementation. Although domestic credit penetration to private sector has increased, it is relatively lower in the Sultanate in comparison to other GCC countries. To be established in three phases, the bureau will help expand lending business, increase access to credit, support responsible lending and reduce credit losses. While the CBO should take the lead in proposing law for a Royal Decree to establish the credit bureau, it will be regulated by the CMA in enhancing trust for easy flow of information and data.
“The CBO should also draft amendments to existing laws required for its successful implementation”, it said. Apart from strengthening banking supervision in monitoring systematic risk, the bureau will perform crucial function of gathering and distributing reliable credit info. Regarding data and credit information, the bureau will collect them from a variety of sources on corporate entities or individuals, consolidate them into credit profiles and make them available to subscribers including financial and non-financial institutions as well as to supervisory authorities.
According to the proposal, the bureau will also collect information on payment behaviour of consumers and commercial entities including data on timely fulfilment of or delinquency in financial obligations. “Credit officers of banks and other organisations use this information to help decide whether to approve an application for a credit facility and what interest rates to apply”, the proposal says. As far as the accountability of the bureau is concerned, Tanfeedh says that the bureau should encourage debtors to repay their debt to avoid being accountable and reduce illegal practices by providing identity checks and verifying personal details. The proposal says that a fee can be collected from customers for availing credit reports. “A payment can also be collected from private credit rating agencies, if allowed, for obtaining data”, it said.
© Oman Daily Observer 2016
