Bangladesh Bank (BB) has permitted individuals and private firms to establish credit bureaus to assess borrowers’ loan eligibility and repayment capacity. These bureaus will analyze borrower data and share it with banks, facilitating informed financial decisions. The guidelines, issued last Wednesday, outline that bureaus will gather information from various sources, including BB’s Credit Information Bureau, with borrower consent.
The initiative aims to reduce information asymmetry, enhance market competition, and benefit creditworthy applicants. Over time, this is expected to lower default rates and interest rates by improving lending quality. However, industry experts urge caution in licensing to prevent vested interests from exploiting the system.
To operate, a credit bureau must be a limited company with a minimum paid-up capital of Tk 10 crore and meet specific director experience criteria. Licensed bureaus will collect and share relevant credit information, aiding banks in evaluating overall debt exposure and repayment behavior.
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