Source: International Finance Corporation
Original article available here.
The International Finance Corporation (IFC), a member of the World Bank Group, has signed an agreement with Jordan to support the Middle Eastern country’s efforts to establish a legal framework for credit bureaus, institutions that will help individuals and smaller businesses access finance, boosting the overall economy.
IFC will work with Jordan’s Ministry of Industry and Trade to help the country draft and adopt new legislation that will regulate the sharing of credit information. IFC will also help raise awareness among the private and public sectors about the economic benefits of credit reporting.
IFC Financial Markets Program Manager for the Middle East and North Africa, Thomas Jacobs, said: “The existence of accurate information helps banks and other lenders assess the creditworthiness of individuals and small businesses and their ability to pay back a loan. This minimizes the risk of nonperforming loans and prevents customers from being overly in debt.”
Credit bureaus are vital to helping increase access to finance for individuals and businesses and play an important role in emerging economies. They give banks and other financial institutions confidence to expand their lending and to make faster loan decisions by providing transparent and detailed customer credit information.
To help raise awareness of the benefits of credit bureaus, IFC, with Jordan’s government, today spoke with senior managers of commercial banks and government officials who will be instrumental in developing a private sector credit bureau industry.
Participants discussed the role of credit reporting in modern risk management and in increasing access to finance. They analyzed the components of an enabling regulatory environment and the challenges of establishing private credit bureaus.
The long-term goals of Jordan’s credit bureau program are to increase the efficiency of financial institutions, to support the growth of smaller businesses, and to mitigate lending risks.
IFC’s work in Jordan is focused on supporting improvements to the country’s overall business environment, which includes helping the government improve leasing regulations, corporate governance for banks, and SME management training.
IFC, a member of the World Bank Group, creates opportunity for people to escape poverty and improve their lives. They foster sustainable economic growth in developing countries by supporting private sector development, mobilizing private capital, and providing advisory and risk mitigation services to businesses and governments. Their new investments totaled $16.2 billion in fiscal 2008, a 34 percent increase over the previous year.
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