Banks, 'honest' borrowers to benefit from new credit bureau service

The National Credit Bureau will launch a new data service in the next few months that should lead to banks offering loans at lower interest rates to creditworthy borrowers, chief executive officer Surapol Opasatien said yesterday.

The NCB's new credit-scoring service will be launched in April. Several commercial banks are testing the system to check its validation, he said.

Bank clients will benefit enormously from the move. If they are found to be honest, with no record of debt-repayment default over the past three years, they should get credit at a much lower interest rate, he said.

The NCB will give a score to each borrower, the highest being AA and the lowest GG. The scores will vary according to the level of debt, past repayment record and the income of each borrower.

The credit-scoring system is tuned to meet cultural, social and economic conditions specific to Thailand, Surapol said, adding that banks overseas had long implemented such lending practices.

The NCB will also help state banks provide micro-lending under the Pracha Wiwat scheme by including micro borrowers' debt history into its system.

The Small and Medium Enterprise Development Bank of Thailand, Government Savings Bank, Islamic Bank of Thailand and Bank for Agriculture and Agricultural Cooperatives are participating in the government scheme to provide small loans to taxi drivers, motorcycle-taxi drivers and street vendors.

The NCB also plans to gather data on households paying telephone, water and electricity bills, but the law needs to be amended before it can do so, Surapol said.

The bureau has a database of 62.11 million accounts, comprising 58.36 million individuals and 3.75 million commercial entities.

Of the 37 million individual accounts that are active, the NCB found that 15 per cent involved non-performing loans, with no repayment for more than 90 days. These are estimated to be worth Bt400 billion or 9 per cent of outstanding bank loans, he said.

"The number of bad debts is quite small, resulting from the better risk management put in place by banks after the 1997 financial crisis," said Surapol.

Banks last year checked 16 million times with the NCB on the creditworthiness of their clients, up from 13 million inquiry transactions the year before.

The NCB has 72 members, comprising banks and non-bank lenders. It aims to increase this to 80 this year, as lenders who finance motorcycle hire purchase have applied for membership, he said.

The number of data accounts is expected to increase by 10-12 per cent this year, he added.

The bureau will open a new branch at Sala Daeng Skytrain station next month, which will offer a credit-checking service for individuals wishing to apply for bank loans. It currently only provides a data service for mortgage borrowers on the second floor of the Government Housing Bank's headquarters.