By Alexander Bronevitsky
The Credit History Bureau or, as it is properly called, the Credit Register, is a cause for envy among most CIS colleagues, notes the Deputy Chairman of the Board of BPS-Sberbank, Oleg Barodko. He explains, “It provides a civilised way of gaining information, helping develop banking business while guarding the interests of borrowers. Most of our neighbours really envy us. Of course, our parent structure — Sberbank of Russia — is luckier in this sense than other banks. Its scale has encouraged many Russians to take out loans but no complete picture yet exists in assessing borrowers.”
He stresses that the value of a positive credit history is now starting to be appreciated — although it appears more like maintenance of reputation than a search for additional benefits. Prior to 2009, a credit bureau was viewed as manna from heaven on the local market since it had been near impossible for banks to assess customers credit-worthiness early in the credit boom. They gave out loans freely, only seeking to raise loan portfolios and gain a slice of the ‘pie’. The results were soon evident, with the quality of borrowers falling and some explicit fraud occurring. A citizen could apply for a loan from several banks and then disappear abroad, leaving a bad debt behind them. Although most Belarusians are honest, with no more than 5 percent of bank loans going unrepaid, even at the height of the crisis, a more thorough system was clearly needed. Of course, every bank has its own black list of persons to whom credit will never be issued but the Credit History Bureau is a far more effective mechanism of risk-assessment, allowing objective decisions to be made. The Credit Register is a breakthrough, modelled on similar structures in Western Europe. In particular, the National Bank has drawn on French experience.
By early July this year, about four million credit histories had been created for Belarusians in the Credit Register of the National Bank of Belarus (up from around 3.8 million in January). However, the Head of the Credit Histories Department of the National Bank’s Specialised Division, Sergey Dubovik, notes that only 37,000 of these apply to business entities; the rest apply to individual citizens. Have so many people gained loans for housing or a car over the last two and a half years? Mr. Dubovik explains not, telling us that credit histories have been created from those holding cards with overdraft facilities, since many exist. Those signing contracts of guarantee are also included.
The law ‘On Credit Histories’ gives every Belarusian the right to apply for a free credit report once a year and for an unlimited number of times for a fee each calendar year. Credit reports can be issued within six working days, on application to the Specialised Division of the National Bank. In the regional centres, applications can be made to regional offices.
