20/10/2014 07:37 AST
The Saudi Credit Bureau (SIMAH) is playing a crucial role in bringing down the value of bouncing checks in the Kingdom, says its CEO Nabil Al-Mubarak.
“Check bouncing has been coming down. The role of SIMAH in this campaign remarkable,” he told Arab News in an exclusive interview.
The value of checks bounced came down to SR3.8 billion in 2012 from a high of SR15 billion in 2009. “In cooperation with Saudi Arabian Monetary Agency (SAMA), Saudi Credit Bureau (SIMAH) has made its own contribution toward this,” says the CEO.
“With the support of SAMA, the central bank of Saudi Arabia, we launched the first Bouncing Check Registry System (BCRS) along with a wide awareness campaign called ‘All Checks are Monitored’. Any bouncing check now is registered in the credit report. The 2010 launch of BCRS represents the cornerstone in reducing the value of bounced checks,” Al-Mubarak told Arab News in an exclusive interview.
The 2010 launch of BCRS represents the cornerstone in reducing the value of bounced checks, he added.
The following are highlights of the interview:
How do you evaluate SIMAH’s role in the framework of the Kingdom’s economy and economic planning?
The Saudi Credit Bureau (SIMAH) plays an important role in helping consumers, corporates and SMEs obtain financing.
SIMAH’s credit data on individuals and/or corporate borrowers provided to its members helps remove uncertainty that has traditionally been associated with lending.
The credit bureau’s accurate and timely credit information also allows financial institutions reduce risks, loan processing times, costs and default rates.
Economic theory asserts that an important impediment to an efficient credit market is the asymmetric information between lenders and borrowers and what SIMAH has put in mind since its operation in 2004.
SIMAH’s other direct benefits to the financial and economic framework emerge from lowering information asymmetry in the credit market include less non-performing loans (NPLs), higher recovery rates, spreading-wise credit culture and raising awareness of credit rights and responsibilities and improved access to credit.
Another indirect gain is the improved performance of monetary policy, especially in times of monetary expansion in which the quality and the transmission of the policy moves smoothly in the economic channels.
For borrowers, SIMAH’s detailed credit information and a modern credit reporting system often lead to lower interest rates, making loans more affordable and more available. SIMAH always supports wise and reasonable lending practices, and helps borrowers avoid over-indebtedness.
These benefits all combine to support broad economic growth.
The World Bank’s (WB) Credit Depth of Information Index for Saudi Arabia for the last five years (2009-2013) is 6 out of 6.
The World Bank’s credit depth of information index measures rules affecting the scope, accessibility, and quality of credit information available through public or private credit registries.
The index ranges from 0 to 6, with higher values indicating the availability of more credit information, from either a public registry or a private bureau, to facilitate lending decisions.
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