DUSHANBE, December 1, 2009, Asia-Plus — Creation of a credit bureau is an important step towards strengthening of Tajikistan”s financial system, Farhod Akbarov, the executive director of the Association of Microfinance Organizations of Tajikistan (AMFOT), said in an interview with Asia-Plus.
According to him, creation of the credit bureau will allow reducing risks for financial institutions. “We know many instances when unfair clients have received loans from several financial institutions against the same pledge,” said the AMFOT executive director, “There were also instances of creation of financial pyramids in the country. The credit bureau could play an important role in preventing such undesirable processes.”
Besides, creation of the credit bureau will reduce financial institutions’ expenses on problem deals. “Today, when there is no yet credit bureau, in case of duplication of loans by unfair customers, financial institutions have to realized mortgaged property that raises creditors’ expenses,” Akbarov noted.
Moreover, creation of the credit bureau could help recovery of the financial sector that, in turn, will lead to increase in inflow of financial resources into the country, he added.
“In recent months, we have organized exchange of customer lists among large microfinance organizations and analysis shows that this resulted in the portfolio risk decreasing by 2 percent,”
A credit bureau is a company that collects information from various sources and provides consumer credit information on individual consumers for a variety of uses. It is an organization providing information on individuals borrowing and bill paying habits.
This helps lenders assess credit worthiness, the ability to pay back a loan, and can affect the interest rate and other terms of a loan. Interest rates are not the same for everyone, but instead can be based on risk-based pricing, a form of price discrimination based on the different expected risks of different borrowers, as set out in their credit rating. Consumers with poor credit repayment histories or court adjudicated debt obligations like tax liens or bankruptcies will pay a higher annual interest rate than consumers who don”t have these factors.
