Karachi, Pakistan, July 13, 2006-
The International Finance Corporation, the private sector arm of the World Bank, today signed an agreement with Datacheck (Pvt.) Limited, Pakistan’s leading private sector credit bureau. Under the agreement, IFC will assist Datacheck in developing credit bureau services, including credit scoring, application processing, fraud prevention services, and asset databases. These new developments are intended to build on Datacheck’s existing credit information services in order to provide local lending institutions with the latest tools to manage credit risk. IFC will provide advisory services to Datacheck through its technical assistance facility, the Private Enterprise Partnership for Middle and North Africa (PEP-MENA).
Peer Stein, the head of IFC’s Global Credit Bureau Program, welcomed the agreement in his address to the local banking community: “As the retail credit industry in Pakistan expands, it is vitally important that lenders have access to and rely on proven techniques for managing credit risk. These services will allow lenders to make better judgments about the creditworthiness of individuals and small businesses, thus minimizing the risk of nonperforming loans and, at the same time, preventing customers from becoming over-indebted.”
Michael Essex, Regional Director for Middle East, North Africa and Pakistan, highlighted the importance of bureaus for the country, “In recent years there has been unprecedented growth in both the demand and the supply of consumer credit products in Pakistan and it is therefore essential that the market has timely and accurate information to help it make more informed consumer credit decisions and adopt proven lending practices. This will help avoid the problem of consumer over-commitment which other emerging economies in Asia have experienced.”
Tariq Jan, managing director of DataCheck Ltd, added, “The performance history data accumulated in DataCheck’s files over the past five years represent an invaluable and unique source of predictive information about consumer payment behavior. These new services will unlock this power and add considerable value to our customer offering. We welcome the support of IFC in recognizing the valuable role of the private sector in helping reduce the information asymmetry between lenders and borrowers.”
DataCheck is Pakistan’s leading consumer credit bureau, which provides a range of information services to the retail financial sector. Established in June 2001, DataCheck currently maintains the country’s most comprehensive database of default and inquiry information on the credit facilities of individuals. From July 2006 on, the existing negative file will be augmented to include positive account performance history, thereby enabling lenders to evaluate more accurately the credit exposure of potential borrowers and significantly reduce the risks associated with retail lending. Among its members are major local and foreign banks, leasing companies, and other financial institutions.
IFC is an internationally recognized leader in credit bureau development. Since 2000, IFC has created or significantly improved credit bureaus in six countries, completed feasibility work in 14 countries, and, together with the World Bank, mapped credit reporting infrastructure and needs in more than 100 countries. IFC supports private credit bureau development through feasibility studies, legal and regulatory advice, research, public awareness projects, long-term coaching, and support. This includes working with financial institutions to improve their understanding of the value and use of credit information. IFC also addresses needs for the protection of data and consumers’ rights.
The International Finance Corporation is the private sector arm of the World Bank Group and is headquartered in Washington, D.C. IFC coordinates its activities with the other institutions of the World Bank Group but is legally and financially independent. Its 178 member countries provide its share capital and collectively determine its policies.
The mission of IFC (
www.ifc.org
) is to promote sustainable private sector investment in developing and transition countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY05, IFC has committed more than $49 billion of its own funds and arranged $24 billion in syndications for 3,319 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY05 was $19.3 billion for its own account and $5.3 billion held for participants in loan syndications.
PEP-MENA is IFC’s technical assistance facility that supports private sector development in the Middle East and North Africa. PEP-MENA focuses on improving the business enabling and regulatory environment; strengthening the financial sector; promoting the growth of small and medium enterprises and their support services, such as business organizations and consulting firms; helping restructure and privatize state-owned enterprises; and developing viable private sector and public-private partnership projects, especially in infrastructure.
