Deputy Prime Minister and Minister of Finance, the Hon. Peter Turnquest said credit bureaus are generally regarded as essential elements of a country’s financial infrastructure, supportive of the overall objective of stability and economic growth, and with benefits to both lenders and borrowers as they offer objective data upon which to make sound credit or borrowing decisions.

DPM Turnquest said, “The Bahamas has extremely high loan arrears, which approaches some 15.6 per cent of banks’ private loan portfolios.

“The non-accrual component is almost 10 per cent of total loans, he added as he introduced the Credit Reporting Bill in the House of Assembly, Wednesday, January 31, 2018.

The high volume of loan consolidation activity since the recent economic crisis demonstrated that persons have exceeded prudent debt servicing levels and that key lenders do not have full information when extending credit, the DPM said.

“We are all painfully aware of the mortgage fallout at Bank of The Bahamas, which resulted in the creation of the Resolve Corporation Ltd. to relieve the Bank’s balance sheet of bad loans, partially resulting from the lack of objective and reliable credit data.”

He said by providing the mechanisms for credit activities to be conducted on full and relevant information, this will facilitate, among other things:

· a reduction in lenders’ exposure to risky loans, thereby mitigating their non-performing loan rates, and making the credit decision process more efficient;

· increased access to credit and to a range of financial products by consumers on more favourable terms and at competitive interest rates, thus reducing their borrowing costs;

· a measure of discipline on debtor behaviour, thus reducing the level of consumer indebtedness and the number of non-performing loans in the financial system; and

· enhancement of the Central Bank’s capacity to monitor system risks and utilise accurate aggregate information on credit quality.

DPM Turnquest said given the impact of credit on the economy, it is proposed that the Central Bank will have oversight responsibility for the credit reporting system, having as its goal the promotion of arrangements that are efficient and effective in satisfying the needs of the various market participants, and supportive of consumer rights and of the development of a fair and competitive credit market.

He also explained that the Central Bank will be responsible for licensing and supervising credit bureaus established in The Bahamas.

By Llonella Gilbert