Public Credit Registry
Public Credit Registry is an institution that collects information from creditors and available public sources on a borrower’s credit history. The Registry compiles information on individuals and/or small firms, such as information on credit repayment records, court judgments, and bankruptcies, and then creates a comprehensive credit report that is sold to creditors. Also, Registry develops Credit scores based on international best practices. A credit score is a number assigned to a borrower based on his ability and capacity to repay debt. This number falls within a range of scores, and a higher score indicates a more creditworthy borrower. This score is computed from available credit history information using a statistical model or mathematical algorithm. Credit scores can be used in the loan approval process for simple accept/reject rules or for more sophisticated risk based pricing rules and credit limits. Credit Registry is essential to the success of credit markets. It serves as indispensable tool used by financial institutions to support their retail lending business. Credit Registry helps address the fundamental problems in financial markets known as “asymmetric information,” which means that the borrower knows the odds of repaying his or her debts much better than the lender does. The inability of the lender to accurately assess the credit Worthiness of the borrower contributes to higher default rates and affects the profitability of the financial institution.
In May 2005, a feasibility study was done by World Bank and it was recommended that Da Afghanistan bank should create Public Credit Registry in order to control credit risk and increase credit penetration.
Users of Public Credit Registry:
The Primary targeted area of PCR is Banks and Microfinance Institutions but, with the passage of time it will cover the followings:
i) Financial companies
ii) Mortgage companies
iii) Leasing companies
iv) Institutions providing credit to micro, small and medium enterprises
v) Factoring companies
vi) Retailers of goods and services providing direct credit
vii) CIB/s licensed by the Bank
viii) Public agencies administering data like the Civil Registry, Commercial Registry, Property Registry, Collateral Registry, Voters Roll, etc.
ix) Public utility companies
x) Mobile and fixed telephone providers
xi) Courts and Tribunals,
xii) Any other institutions in possession of information or data that can serve the purposes of credit reporting.
xiii) Public Credit Registry will commence its activities in nearest future and will be in the service of its users.