SBP issues directions for quality data reporting in eCIB

KARACHI: The State Bank of Pakistan (SBP) on Thursday issued new guidelines to ensure quality data reporting in the Credit Information Bureau (eCIB) so financial institutions could make informed credit decisions, a statement said.

The eCIB of the SBP collects borrowers’ credit information and makes it available to financial institutions (FIs) for making informed credit decisions. The information in eCIB is also used by the SBP for supervisory purposes.

The SBP developed instructions after having carried out an in-depth assessment of the mechanisms put in place for eCIB data feeding, compilation, validation and reporting by the member FIs. Despite the issuance of repeated instructions by the SBP from time to time regarding the quality data reporting, still some inconsistencies in the eCIB reported data were witnessed, the statement said.

Such inaccuracies in data could result in adverse selection by the FIs such as the inadvertent refusal of credit application of a good borrower or extension of credit to a bad borrower. “Besides, it may also expose the member FIs to legal and regulatory implications,” the circular said.

The SBP advised all member FIs to ensure that the financial and non-financial data was accurate, sufficient, relevant, and collected on a systematic basis from all reliable, appropriate, and available sources.

In order to strengthen the integrity and reliability of the reported eCIB data, the member FIs were directed to develop well documented standard operating procedures (SOPs) for eCIB data feeding, compilation, validation, and its reporting.

The SOPs should be duly approved by the president / CEO. It should be either part of the relevant existing SOPs or an independent document. The FIs should adequately staff the relevant function / department responsible for data reporting by providing adequate systems and human resources commensurate with the nature, size, and complexities of their business needs and requirements.

Besides, there should be proper succession planning and backup in case of any eventuality for the staff dealing with eCIB reporting, it directed.

The member FIs should ensure that there should be an independent mechanism for data validation before its submission to the eCIB. In case, the persons / functions responsible for data reporting reside under the reporting line of operations, independent validation should be made by the risk management function before submission.

However, in case, the persons/functions responsible for data reporting reside in the reporting line of the risk management function, then the data validation should be made either by compliance function or by the internal audit of the member FIs, the circular said.