Banks can cooperate to benefit from CRB
EDITOR—The proposed credit reference bureau (CRB) is a very welcome idea. A credit bureau in some ways is a collective action between all financial players. Technically, each bank has its own small credit bureau because it evaluates the credit worthiness of its existing and potential customers.
EDITOR—The proposed credit reference bureau (CRB) is a very welcome idea. A credit bureau in some ways is a collective action between all financial players. Technically, each bank has its own small credit bureau because it evaluates the credit worthiness of its existing and potential customers.
However, to enjoy economies of scale, several banks may cooperate, and provide information about their clients to credit bureaus in return for getting the same information about clients in other banks.
To increase efficiency, credit history bureau requires a sound identification system, and a good information (data) management system, where every citizen can be uniquely identified.
For example, without a unique number, ‘Elgon-Masaba’ with a bad credit history in bank A is different when he changes his name to ‘Masaba-Elgon’ and applies for a loan from bank B.
With a unique identification number, bank B can pay the credit bureau to obtain the credit history of Elgon-Masaba. (I am assuming it is illegal, and that the police can detect and apprehend Elgon-Masaba for attempting to be Masaba-Elgon). I imagine that lack of unique identification also causes problems in drivers’ licence and passport applications, detection of payroll fraud (eg ghost soldiers), universal primary and secondary education enrolment verification, food aid distribution, national election voter’s list duplicates, and tracking of birth and death in the country.
To develop a national identification system, one option would be to contract one or more of the national universities in Uganda, and another would be to outsource to private providers such as those issuing computerised drivers’ licences.
Muganga Kizito
East Lansing, Michigan
However, to enjoy economies of scale, several banks may cooperate, and provide information about their clients to credit bureaus in return for getting the same information about clients in other banks.
To increase efficiency, credit history bureau requires a sound identification system, and a good information (data) management system, where every citizen can be uniquely identified.
For example, without a unique number, ‘Elgon-Masaba’ with a bad credit history in bank A is different when he changes his name to ‘Masaba-Elgon’ and applies for a loan from bank B.
With a unique identification number, bank B can pay the credit bureau to obtain the credit history of Elgon-Masaba. (I am assuming it is illegal, and that the police can detect and apprehend Elgon-Masaba for attempting to be Masaba-Elgon). I imagine that lack of unique identification also causes problems in drivers’ licence and passport applications, detection of payroll fraud (eg ghost soldiers), universal primary and secondary education enrolment verification, food aid distribution, national election voter’s list duplicates, and tracking of birth and death in the country.
To develop a national identification system, one option would be to contract one or more of the national universities in Uganda, and another would be to outsource to private providers such as those issuing computerised drivers’ licences.
Muganga Kizito
East Lansing, Michigan