RANGOON — Although financiers in Burma have been trying since 2012 to form the country’s first credit bureau, concerns about how much foreign involvement in the process should be allowed have delayed their efforts, bankers said this week.
The Central Bank of Myanmar aims to form the credit bureau to allow lenders to check the backgrounds of prospective borrowers, with assistance from the Credit Bureau Singapore, according to Ye Min Oo, the managing director of Asia Green Development Bank.
“Though the Central Bank of Myanmar and bankers have been trying to form a Myanmar credit bureau since then , now it’s been delayed by organizers because the CBM is having second thoughts about how to form it. [It is] considering whether or not to allow foreign participation,” he said.
Under the initial agreement made in 2012, the Credit Bureau Singapore was to take a 40 percent stake in shares of the yet-to-be-formed bureau, and Burma’s Central Bank, along with domestic private lenders, were to take the remaining 60 percent.
“With this credit bureau, the Central Bank of Myanmar must participate, and private banks too, so now it’s been delayed because of the CBM’s second thoughts on allowing foreign contribution,” Ye Min Oo said.
Phone calls by The Irrawaddy to the spokesperson for the Central Bank of Myanmar went unanswered on Thursday.
A credit bureau collects information from a range of sources to provide consumer credit information on individuals, which is used for a variety of purposes, including determining loan eligibility. Credit information, such as a person’s previous loan performance and bill-paying habits, is used to predict future behavior and gauge credit worthiness.
In Burma, proponents hope the bureau will help boost lending to people who otherwise would be denied loans due to their inability to meet the collateral requirements currently in place by banks as a form of insurance against defaults.
Zaw Lin Htut, deputy managing director of Kanbawza Bank, said that in addition, Burma’s banking sector needed to form the credit bureau before the government would allow the issuance of credit cards by private banks in Burma.
“It’s difficult to collect customers’ credit history without a credit bureau, so we need to form a kind of bureau first. I heard that the government has been trying to form this, but it’s been delayed. If we have a bureau, it will be easy to issue credit cards,” he said.
“If we have this credit bureau in Burma, we can get history—information on people about whether they can be trusted to pay back loans. We can check out information through the bureau, that’s why bankers have been trying to form this bureau, but I have no idea why the Central Bank of Myanmar is delaying its formation,” Zaw Lin Htut added.
Acceptance and use of credit cards in Burma remains limited, and only a few major hotels and shops that cater to foreign tourists will even consider taking Visa or MasterCard, much less cards issued by the Japan Credit Bureau (JCB) or China Union Pay—all of which have had the green light to do business in Burma since October 2012.
Despite the Central Bank’s reluctance to give consumers credit cards, the Myanmar Payment Union (MPU)—which includes 14 of Burma’s 19 privately owned banks—is moving forward with plans to work together with Japan’s JCB to expand its network of domestic debit-card users.