Dhaka, Bangladesh – City Bank PLC, one of the leading commercial banks in the country, has announced its decision to establish a new subsidiary company named City Credit Bureau. The decision was finalized at the bank’s 688th Board of Directors meeting held on Thursday afternoon (September 25).
The move is strategically aimed at aiding the bank’s overall growth, according to a price-sensitive notification released by City Bank. Once final regulatory approval is secured and operations commence, City Bank will become the first bank in Bangladesh to have its own credit bureau.
Details regarding the paid-up capital of City Credit Bureau and whether it will be a wholly-owned subsidiary (100% ownership) of the bank were not immediately disclosed.
Private Credit Bureaus Gain Ground
This development follows the Bangladesh Bank’s recent issuance of preliminary authorization to five private entities this month to establish credit bureaus. City Bank is among the recipients of this initial approval.
The other institutions that received primary permission are:
- bKash Credit Bureau (from the mobile financial service provider bKash)
- Credit Info BD
- First National Credit Bureau
- TransUnion (a US-based company)
This marks the first time that permission has been granted for the establishment of private-sector credit bureaus in Bangladesh.
The Role of Credit Bureaus in Bangladesh
Currently, the central bank, Bangladesh Bank, operates the sole credit reporting department, known as the Credit Information Bureau (CIB).
The CIB maintains records of all borrowers’ loan information from scheduled banks and non-bank financial institutions (NBFIs) across the country.
The primary function of a credit bureau is vital to the country’s financial system:
- Information Storage: It collects and preserves data regarding loans and borrowers.
- Risk Mitigation: The law stipulates that any individual or institution classified as a loan defaulter is ineligible to receive new credit facilities from banks or financial institutions.
- Mandatory Reporting: Consequently, banks and NBFIs are legally required to obtain a credit report and clearance certificate concerning a customer’s loan history before sanctioning new credit.
The introduction of private credit bureaus like City Credit Bureau is expected to enhance the efficiency and scope of credit information reporting within the nation’s financial landscape.
