The State Bank of Pakistan (SBP) has agreed to reduce the reflection period in the Electronic Credit Information Bureau (eCIB) of written-off/waived loans and advances for corporate borrowers by 5 years, that is, from 15 years to 10 years.
The eCIB is a source of credit history information for banking system borrowers and is primarily used by banks/financial institutions to determine borrowers’ creditworthiness. A thorough assessment of international standards follows this decision.
It was a general opinion that representing a longer duration of negative history/write-off might deprive borrowers of a new start and preclude borrowers from access to finance for longer periods (following write-offs/waivers) irrespective of the current financial performance of the borrowers and other favorable details. It should be noted that such issues have also frequently been posed by various corporate bodies and members of the Chamber.
They were of the opinion that it is a long period to put a one-time write-off/waiver in eCIB for 15 years, especially when a company has paid back or resolved its transaction with the bank. It poses problems for companies to use new funding for a long time.
In addition to helping to strengthen the country ranking annually conducted by the World Bank in the Ease of Doing Survey, reducing the reflection period to 10 years would put our regime in line with international practice and provide a favorable business climate to raise economic activities.
One of the supervisory methods used worldwide to support supervisors in off-site monitoring and on-site examinations is the Credit Information Bureau/Credit register (eCIB). In 1992, SBP established its credit register, i.e. eCIB, with the intention of complementing its position of prudential oversight and risk monitoring feature assessment of its regulated FIs.