The Credit Information Bureau (CIB) is a specialized department of the Bangladesh Bank responsible for maintaining a comprehensive database of borrowers, including individuals and businesses, across banks and non-bank financial institutions (NBFIs). Even if a loan or lease account is written off, the relevant information must still be reported to the CIB. When an individual applies for a credit card with any bank, the bank first reviews their CIB report before processing the application.
Establishment and Purpose of CIB
The CIB was established in 1992 under the World Bank’s Financial Sector Reform Project to prevent the proliferation of non-performing loans (NPLs). Banks and financial institutions use CIB reports to assess risks when granting new loans or restructuring existing ones, ensuring better credit risk management.
How CIB Reporting Works?
All banks and financial institutions must submit details of their disbursed loans, leases, and credit card accounts to the CIB every month. If a loan or lease account is rescheduled, it must also be reported. Additionally, if a credit cardholder fails to pay their bill before the due date, it is recorded in the CIB report. This can lead to difficulties when applying for credit cards or loans from other banks, sometimes resulting in rejection.
Even written-off loans or lease accounts remain recorded in the CIB database. If a credit cardholder misses their bill payment deadline, this too is reported, potentially affecting future financial opportunities.
CIB’s Connection to the Stock Market
The CIB plays a crucial role in stock market regulations. According to securities laws, if any director of a company is a loan defaulter, that company is ineligible to issue an Initial Public Offering (IPO) or Rights Shares.
Before approving an IPO or rights issue, the Bangladesh Securities and Exchange Commission (BSEC) collects CIB reports on the company and its directors. Even if all other aspects of the proposal are favorable, a company’s IPO or rights share issuance may be rejected if any of its directors is listed as a loan defaulter in the CIB report.
How to Obtain a CIB Report?
Individuals cannot access their CIB report directly. It is collected by the relevant bank or financial institution from the Bangladesh Bank, often with an applicable service charge if requested by the customer.
By understanding the importance of the CIB report, individuals and businesses can make informed financial decisions and maintain a strong credit history.