Credit bureau expects review requests to jump

The number of credit-review requests last year reached 31 million, the highest in five years, but the NCB believes the number of inquiries this year will jump to 36 million. Most will be for small enterprises outside of supply chains, Surapol Opasatien, chief executive officer of the bureau, said.

The current fragile economy is not conducive for financial institutions to chase new customers, so the banks have to maintain the quality of their existing customer bases, leading to more requests for credit reviews, he said.

Several institutions in 2015 changed their policies on reviewing credit, checking the creditworthiness of borrowers every three months, while some banks check every month.

In general, financial institutions request credit reviews of existing small-enterprise customers every three to six months. The state-owned banks seek reviews every six months.

Small standalone businesses that are not part of the supply chains of corporates and enterprises in the agricultural sector are expected to be affected by a fragile economy this year because those don’t receive the direct help from the government. Medium-sized enterprises, in contrast, have received soft loans and benefited from the credit-guarantee scheme, Surapol explained.

“That is why the private sector, led by the Joint Standing Committee on Commerce, Industry and Banking, has asked the government to introduce a second phase of soft loans to small enterprises. The banks are worried about their customers in this category, and some of them have informed the NCB that they are preparing their own measures to help SME clients, as they don’t want to see them fall into bad debt in 2016,” he said.

The banks have to inform the NCB about such measures because they might have an influence on creditworthiness. There is a need to ensure that customers undergoing debt restructuring do not see their credit downgraded, he said.

Currently, the NCB holds 78.82 million accounts from 85 financial institutions, of which around 3.55 million are in the bureau’s commercial database, and 250,000 are SMEs.

This year, the state-owned Bank for Agriculture and Agricultural Cooperatives will be a member of the NCB. The agricultural sector has been struggling with impacts from drought, so the BAAC might be in need of more credit reviews.

Surapol said the economic uncertainty also made consumers more aware of their credit status, so the number of self-inquiries is expected to surge to 1 million this year from around 700,000 in 2015. 

Some individual consumers have told the NCB that they don’t want to be rejected by the banks when they have to borrow money, so they have chosen to check their own credit first, he said.

“We have 22 million borrowers in our database, but if in 2016 self-inquiries number 1 million, that will be 4.5 per cent of the total. That is closer to the international standard of 20 per cent.”