The Central Bank of Myanmar has issued a licence to Myanmar Credit Bureau Limited, a joint venture between the Myanmar Bank Association and Singapore’s Asian Credit Bureau Holdings (previously NSP Holdings) to operated as the country’s first such institution to enable banks to assess risks.
The bureau will help lenders access credit profiles of borrowers through its database.
“This will help banks to make a proper risk assessment about the credit worthiness and could reduce strict guidelines about a requirement for a collateral,” said U San Thein, senior adviser to German development agency GIZ and a former central banker.
In the joint venture, Myanmar Bank Association will hold 60 per cent with the rest held by Asian Credit Bureau Holdings. Myanmar Credit Bureau is expected to be operational within a year.
Apart from the licence, the bureau will require to invest a capital of at least K3 billion ($2.2 million) to provide the service.
The development comes after the Central Bank of Myanmar issued a regulation for credit reporting last year.
The International Finance Corporation, a member of the World Bank group, has been supporting the implementation of the credit bureau and its regulation.
Vikram Kumar, IFC Country Manager for Myanmar said, IFC’s support for Central Bank of Myanmar is to improve access to credit for individuals and businesses, especially microentrepreneurs and SMEs in Myanmar.
“An effective credit information sharing regime will help increase access to finance for borrowers, particularly micro, small and medium enterprises. This is a critical first step for a move towards interest rate liberalization in Myanmar as it will lead to the adoption of risk based pricing for loans,” said Kumar during last year’s launch of the regulation for credit reporting.
United Kingdom’s Department for International Development has also been assisting the Central Bank of Myanmar to develop a comprehensive and modern credit reporting system.