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Track Borrowers Via Nib Numbers

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The proposed Credit Bureau should use National Insurance Board (NIB) numbers to track Bahamian borrowers, a well-known businessman yesterday expressing hope it would relieve him and other entrepreneurs from having to check employee excesses.

Dionisio D’Aguilar, Superwash’s president, told Tribune Business that some Bahamians might still be able to evade the Credit Bureau’s checks due to the use of multiple names and aliases - a common trait in this society.

Nevertheless, the former Chamber of Commerce president described a Bahamian Credit Bureau as “long overdue”, and called on the Central Bank of the Bahamas to display “some backbone” to make sure it was implemented.

The Central Bank released the legislation that will facilitate the Credit Bureau’s creation this week, in a bid to obtain public feedback, but Mr D’Aguilar warned that likely “resistance” - both to the concept and the fact data would be held overseas - might delay implementation by up to two years.

However, profession “100 per cent support” for what he termed “an excellent idea”, Mr D’Aguilar expressed hope that it would enable himself and other business owners from having to act as their company’s own ‘Credit Bureau’.

Disclosing that over-borrowed staff were frequently seeking loan and salary deduction sign-offs from him, Mr D’Aguilar told Tribune Business that letting these employees have their way could result in increased internal theft and a loss of “will to work”.

“That’s an excellent idea. It’s long overdue I think the Central Bank is absolutely correct; 100 per cent right,” Mr D’Aguilar said. “There are many, many people that go and borrow from many, many institutions, and it’s inconceivable to me that these institutions don’t know before they make a loan what the other obligations of these borrowers are.”

Expressing hope that a Credit Bureau would prevent defaulting Bahamian borrowers bouncing from one institution to the next, the Superwash president warned that matching credit histories to names might prove problematic.

“They need to come up with a system that tracks it by NIB number, because everyone in this country has five names,” Mr D’Aguilar told Tribune Business.

“Many people, they still use their mother’s name, their father’s name, their married name. When they default at one institution, they go to another and borrow again. The second institution does not know they’ve borrowed from another already.

“The country needs this. There are people taking advantage of the fact they can go around and borrow from many people, and there is no central monitoring agency to stop them doing it.

“This is just going to close loopholes in a slack and sloppy system that people abuse.”

Mr D’Aguilar, though, expressed concern that a Bahamian Credit Bureau may take two years to implement, fearing that its proponents may take fright at “the first sign of resistance”.

Warning that “push back” might also result from the Credit Bureau operator being foreign, with personal and financial data held overseas, the businessman called for furniture and appliance retailers - any firm that took payment via salary deductions - to be mandated to supply data to this facility.

While acknowledging that a Credit Bureau would make it more difficult for many Bahamians to access loans, and expose their “uncreditworthiness”, Mr D’Aguilar said these were persons who could not afford to pay back the money they were borrowing.

“I watch my staff, and they go and borrow all around the place. They borrow from the banks, they borrow from Furniture Plus and they borrow from Best Buy, and if I say they can’t do it, these companies wouldn’t know they have existing arrangements with these other people,” Mr D’Aguilar told Tribune Business.

“I find myself in my company, as an employer, acting as a Credit Bureau. I have to tell my staff, no, you can’t borrow it, or no, I won’t sign that salary deduction.”

Explaining why he acted as a personal ‘creditworthiness’ checker, Mr D’Aguilar said: “If they over-borrow and their pay cheque is miniscule, they lose the will to work.

“If I sign all these salary deductions and letters, and they’re getting no salary every two weeks, they lose the purpose of work. If it’s going to the bank, appliance and furniture stores, why am I in work?”

“They just can’t afford it,” he added. “In order for them to survive, they’ve got to steal. If their cheque is going to the financial institution, the appliance and furniture store, then the only way they can only eat, commute and pay the rent is to tief.

“I see this every day. It’s a major problem, it’s [a Credit Bureau] long overdue, and I don’t know why it’s taken them so long. The consequences of not doing this are evident in the vast and large default rates of the banks.

“The Central Bank should forge ahead. It’s good governance. The Central Bank will have to display backbone to get this through.”

The Central Bank previously warned commercial banks were issuing “more risky loans” because they do not have full information on borrower creditworthiness.

It said the Credit Bureau’s creation would help to eliminate a situation where Bahamian commercial banks were exposed to unnecessary lending risks because they were unable to access all relevant information on potential borrowers.

This, the regulator indicated in the consultation document, had potentially resulted in Bahamian/resident borrowers with good standing being exposed to higher interest rates in the absence of a Credit Bureau.

“In the current lending environment, lenders are making credit decisions on less than full information on borrowers’ indebtedness, which leads to more risky loans being extended,” the Central Bank warned.

“A credit reporting system would provide banks, non-bank financial institutions and other lenders with additional tools to evaluate the creditworthiness of their customers and to better equip the Central Bank to carry out macro-prudential monitoring of the economy.”

The initiative has already been backed by the Clearing Banks Association (CBA). Its head, Sean Albert, described the proposed Credit Bureau as “a great start” to establishing a proper credit risk management system in the Bahamas, noting that this nation’s non-performing loan (NPL) levels were among the Caribbean’s highest.

He said: “With the Bahamas being one of the highest non-performing loan countries in the region, anything that helps institutions analyse and manage risks is welcome.”

Bahamian commercial banks had $1.028 billion in non-performing loans on their books at end-July 2014, with more than $1 out of every $5 lent by the sector in arrears.

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