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In Bangladesh's banking sector, the Credit Information Bureau (CIB) report of Bangladesh Bank is a cornerstone of prudent lending decisions. Before approving any loan or credit facility, banks rely heavily on this report to assess a borrower's creditworthiness. It provides a consolidated view of existing liabilities, repayment behaviour, overdue status, classification history, and even legal complications such as court-imposed stay orders. It also captures the number and types of credit facilities a borrower holds across banks and financial institutions, including credit card exposures.
A particularly critical element of the CIB report is the "Requested Contract Category," which indicates whether a borrower has recently applied for credit facilities at other banks or non-bank financial institutions. This feature is essential for identifying multiple concurrent loan applications and helps lenders assess the borrower's overall financial exposure and intent.
For example, if a customer applies for a loan at one bank and subsequently approaches another, the second bank should ideally detect the earlier application through the CIB report. This enables the lender to seek clarification and make a more informed decision. However, recent observations suggest that this field is often unpopulated or not updated in a timely manner, creating a significant information gap.
The implications are serious. In the absence of accurate data on ongoing credit requests, banks may unknowingly approve multiple facilities for the same borrower within a short period. A customer could secure approval from one institution, delay disbursement, and obtain another approval elsewhere-eventually drawing funds from both. Without updated CIB data, such overlapping exposures may go undetected.
This risk is particularly acute in unsecured lending, such as personal loans and credit cards, where no collateral exists to limit borrowing. Unlike secured loans, unsecured facilities allow borrowers to accumulate debt across institutions more easily, increasing the likelihood of over-indebtedness.
Such gaps not only elevate borrower-level risk but also pose broader systemic concerns. Incomplete information hampers the accurate assessment of repayment capacity, weakens credit discipline, and challenges effective risk management within the banking sector.
Given the seriousness of the issue, Bangladesh Bank should promptly investigate the underlying causes. Whether due to technical glitches or reporting delays, corrective measures must ensure timely and reliable data updates. Strengthening the CIB reporting framework-potentially through real-time or near real-time updates-is essential.
A transparent and robust credit information system is fundamental to financial stability. Ensuring the completeness and accuracy of key data fields, particularly the "Requested Contract Category," is not merely operational-it is critical for safeguarding disciplined lending and sustainable growth in Bangladesh's financial sector.
The writer is First Assistant Vice President, NCC Bank PLC.