World Bank: Credit Data Key In a Crisis
This week a World Bank Group cautions against making Covid-19 related regulatory allowances that reduce the utility of essential credit-related data.
Disruptions in supply chains and reductions in demand have had a huge impact on profitability during the pandemic. In order to avert a credit freeze, regulators worldwide have introduced unprecedented financial measures – from a moratorium on credit repayments and due-date extensions to mandating that credit providers stop reporting negative data.
These measures, however, could impair access to accurate credit information. Credit data supports lending decisions, policy-formation, and compliance with financial standards – so inaccurate data could cause a problem for economic recovery.
Instead, full-file credit information (both positive and negative) would help identify risk areas, and accurate credit reporting could be used to support data-driven policy.
During a pandemic, when risks are amplified, the importance of reporting systems cannot be emphasised enough. Measures to boost business at this time cannot come at the expense of accurate, useful information that lenders, investors and policy makers need to make informed decisions.
Read the blog here. Recently a guidance note was released on the topic of the treatment of credit data in credit information systems during COVID-19 by the International Committee on Credit Reporting (ICCR)—the standard-setter on credit reporting, the World Bank Group chairs and hosts the Secretariat for the committee.