History of the credit bureaus in Thailand

1
History of the credit bureaus in Thailand

• Authorities in 1994 first call the establishment
  of a central credit bureau during the drafting
  of the financial system master plan.
• In 1997 the finance ministry reiterated its
  desire to see a credit bureau established by the
  end of the year. But the financial crisis began
  in july led to the project suspended.

2
History of the credit bureaus in Thailand

• In early 1960s,when Dr Puey was the governor the
  commercial banks were required to submit monthly
  reports on loans of more than 500,000 baht
• Coverage was expanded to all bank customers in
  1986 while the reporting amount was raised to one
  million baht in 1976 and five million baht in
  1990
• In 1976 finance companies were obligated to
  submit reports to a separate registry

3
Post crisis effort to set up credit bureau (after
1997)

• In 1998 after dust settled ,ministry of finance
  and central bank revive the effort to set up
  credit bureau.
• Ministry of finance went ahead and set up the
  Thai credit bureau with the Government Housing
  bank and a local technical partner as
  shareholders.
• commercial bank s finally went ahead and set up
  another bureau and partnered with Thai and a
  foreign technical partner

4
Two credit bureaus co-exist

• Both bureaus start operating about the same time
  in early 2000
• Both outsource local partners for data centers.
• TCB , 49 owned by the government housing bank
  and 51 by the Thai technical partner went for
  local software developed by its technical
  partner.
• TCB start with retail consumer loans database,
  inheriting its partners and relying on data from
  sate banks and non-bank financial institution
  such as credit card and hire purchase firms
• the other bureau 50 owned by commercial banks
  and 50 by the Thai and foreign technical
  partners ,purchased foreign software and start
  with corporate and up-market retail loan, using
  the same data set that commercial banks
  submitted to central bank.

5
While credit bureau were up and running credit
information act was drafted

• Credit information business act was drafted by
  the central bank in early 2000
• Parliament spent a few years changing much of the
  contents, turning is into a consumers protection
  law, tightly regulate how bureaus do business and
  imposing heavy criminal penalties and bureaus for
  seemingly possible small mistake

6
Protections to owner of information

• Right to know which information belonging to
• him kept by the credit information company
• Right to inspect his information
• Right to request for correction of incorrect
  information
• Right to object when he is aware that information
  belonging to him is incorrect.
• Right to be informed the result of inspection of
  information belonging to him within specified
  time.
• Right to know causes of refusal of the
  application for credit facilities or services
  from financial institution in the case that the
  financial institution uses information of credit
  information company as a ground for such refusal
• Right to appeal to the committee pursuant to art.
  27

7
Protection to owner of information

• May pay application fee inspect his information
  as set by the committee
• The fee will not exceeding 200 baht
• If the financial institution refuse the
  provision of credit facilities due to the reason
  relevant to information of such customer, the
  financial institution shall state the reason(s)
  of such refusal or increase of service fee
  including source of information to the customer
  without paying any fee.

8
Critical items of the law

• Article 18 19 members must submit correct and
  up-to date in credit information to the bureau
  (regardless of permission by data owners) then
  must notify data owner within 30 days
• failure to act could bring fines and/or 5-10
  years jail penalty

9
Critical items of the law

• Article 20 credit bureau must disclose to
  members (by written consent of the data owners)
  credit information to be used for the purpose of
  credit granting
• Failure to act could bring fine and/or 5 years
  penalty

10
Credit information business act 2002

• Law passed all reading in late 2002 ,became
  effective march 2003
• Fearing law penalties members and board of
  directors and management of both bureaus resign
• Both bureaus suspended operation for 3 months
  during Q2/2003 and asked credit information
  protection committee to clarify law
• World bank and CDIA experts met with Thai
  officials and express concerns

11
Credit information protection committee

• CIPC worked to loosen laws strict requirements.
  soften members fears for data mistakes and allow
  bureaus to disclose credit information before
  actually seeing the written consent by having
  members collect consent and confirm receipt of
  consent on online screen
• Both bureaus re-opened for business in june 2003

12
Credit Information Business act 2002

• Financial Institution eligible for credit
  membership
• Commercial bank
• Financial company
• Securities brokerages
• Life insurers
• Credit foncier company
• General insurers
• Credit card issuers
• Financial institution
• Credit granting entities as announced by the
  credit information protection committee

13
Current attempt to merge Thailands two credit
bureaus

• Ministry of finance sees merger of the two
  bureaus as beneficial to Thai financial system.
• Ministry of finance is working on details
  systems and financials.

14
Complaints on credit reporting

• Bank did not correct data after customer settle
  the debt.
• Owner of information could not get new loan.
• The bill help customer got new loan within 30
  days.( fine 300,000 baht and fine of not
  exceeding baht 10,000 per day during the period
  of violation or until the correction is made.

15
Correction to be made

• Art 48 any member who does not inform to its
  customers about the information provided to
  credit information company as stipulated in art
  18 or fails to comply with the rules and
  procedures determined by the committee as
  stipulated in art 18 ,shall be subject to
  imprisonment of five to ten years , or fine of
  not exceeding baht 500,000 or both.
• (The imprisonment should be deleted.)