credit cards on "debt" list
By Iromi Perera
Sri Lanka has close to half a million credit card
holders but many are unaware that if they default on payment, their
names are filed as a "debtor" with the Credit Information
Bureau (CRIB) - restricting chances of getting a bank loan.
CRIB says this process has been in force since 1998, some anxious
cardholders called The Sunday Times FT last week saying they believed
their fundamental rights would be violated by personal information
being passed to another authority. At least two respondents in a
survey conducted later by the paper said it was an invasion of their
began collecting data on credit card defaulters in 1998 and banks
admitted they were aware that this information was a compulsory
requirement. CRIB said it is compulsory for banks to provide information
of credit card holders who have defaulted in payments. Credit card
holders, who do not make the minimum payment for bills over Rs 5,000
for 90 days consecutively, will be entered in the CRIB 'negative'
was clear from The Sunday Times FT survey that most of the banks
dealing with credit cards haven't adequately informed their clients
about the CRIB rule.
to N.P.H. Amarasena, General Manager of CRIB, there are currently
around 40,000 credit card defaulters in the CRIB database. The number
of defaulters has been increasing since 1998. Once a defaulter settles
their debt, they will be removed off the 'negative' list but their
details will include the fact that they have defaulted at some point
and were irregular in payment. Amarasena firmly stated that the
CRIB list was not a 'blacklist' but merely a database, which is
for the benefit of the lending institutions. He said CRIB has been
conducting public awareness cam
since 1998 in order to make the public aware that defaulting in
credit card payments could result in their details being included
in CRIB. "It is the law and I hope everyone is aware of it,"
he said. On verification, Hatton National Bank officials said they
inform their customers when such details are sent to CRIB.
bank official said customers are told in writing that if payments
were not made on time CRIB would be informed. An HSBC official said
that since June this year, they have inserted a new clause into
the terms and conditions of the credit cardholder's agreement saying,
"the cardholder hereby consents and acknowledges that the Bank
is entitled to report him to any relevant CRIB list internationally,
in the event of default of any transaction."
snap Sunday Times FT survey amongst 50 respondents revealed that
72 percent of credit cardholders were unaware that their details
would go to CRIB if they default in payment. Some 50 percent were
unaware that banks and lending institutions use CRIB to ascertain
the credit-worthiness of those who apply for loans. About 94 percent
of the credit cardholders said the banks and credit card companies
should inform them before sending details to CRIB. CRIB was set
up in 1990 as an initiative of the Central Bank.
shareholders are the Central Bank, commercial banks, specialized
banks, finance companies and leasing establishments, with the Central
Bank being the biggest shareholder. Banks and lending institutions
get clearance from CRIB for those who apply for loans in order to
ascertain the creditworthiness of the applicant. CRIB data is presently
available only to its shareholders but Amarasena said in future
the agency would permit government institutions, mobile and telephone
providers and other companies which give goods on credit, access
to its database.
should be told”
Some comments from respondents in The Sunday Times FT survey on
I thought an action was filed for recovery of debt before CRIB
was informed. I was not aware that the notification was automatic.
Cardholders should be made aware.
worth asking the banks and CRIB what happens if for example a
credit worthy customer is abroad for 3 months and the credit card
bill is unpaid for 3 months."
that could cause me to be discriminated against because of possible
bad credit should be reported to me as a warning several times
so that I have every chance to make restitution before my name/goodwill
is forever tarnished publicly."
of the problems is that financial literacy is poor in Sri Lanka.
Even if the customer is made aware it would be in the small print
in the card application which most of us never read. I guess that's
where the media steps in to fill in the information void."
should have information on default loans, advances and card balances
after giving a reasonable period of time for the customer to settle.
Failing which you would find bad customers borrowing from all
over the place, as obtaining credit cards are quite easy these
must forewarn their clients. If not even for small outstanding
amounts the clients' names will be sent to the CRIB. Consequently
the client's reputation and standing would suffer.
happens if there is a dispute between the bank and the client
regarding a specific payment where the client may have a justifiable
reason not to pay? It then becomes blackmail if the bank unilaterally
posts the client's name with the CRIB. This is totally unfair