Wednesday, December 8 2010 18:39
ACRA proved efficient even in hard economic times
ArmInfo. Interview with ACRA Credit Bureau Executive Director Artak Arzoyan
How many credit histories are in the database now and what was the growth over the last year? What is ACRA’s share in information coverage?
ACRA Credit Bureau has information on 950,000 borrowers. Information growth rates have slackened in the current year , however, that the number of credit histories in 2011 will
exceed 1 million. Over the last year the number of credit histories of economically active solvent population of Armenia grew by 30-40,000 and by100-150,000 versus 2008. Our database is permanently replenished. The process is slow at present, but the base will be replenished more frequently as economy recovers. Few families in Armenia can afford an overdraft, auto loan or mortgage even in case of active lending.
ACRA has information on some 41% of adult population of the country. WB Doing Business report ranked Armenia the first in the CIS in terms of this indicator.
How frequently do banks and credit organization apply to ACRA for information? Have you revised the tariffs per information unit?
Information coverage of ACRA Credit Bureau is 180%. In the period of crisis, banks toughened requirements to borrowers to avoid risks and preferred dealing with bonafide customers. When providing medium-sized or big loans, creditors request information from ACRA on the potential borrower and related persons. Such tactics is characteristic to most of Armenian
banks that make 3-4 requests to the Bureau in average when providing a loan. We strived for such demand yet in 2004. Banks request information not only from ACRA but also from the Credit Register at the Central Bank. The credit bureau is one of the few institutions that proved efficient even in the hard economic times.
At what stage is introduction of the scoring system? In addition, the bureau planned operative monitoring of borrowers and statistical analysis of the loan portfolio of banks of credit organizations.
There are two types of big scorings, in general: behavioral scoring and application scoring. ACRA Credit Bureau will introduce ACRA-Score system on March 1 2011. The system is currently under testing. Behavioral scoring system has become especially relevant after
banks toughened requirements to borrowers. To introduce Behavioral Scoring 40 million drams were spent on full software upgrade and re-equipment of ACRA. The best experience of
corporate management meeting international standards has been introduced. Behavioral scoring is based on data of the credit bureau. The package of analyses of the credit portfolios of banks and credit companies is ready and successfully used by banks and some credit companies. The package of analyses is very solid as it contains very serious marketing information. It is a valuable marketing instrument for management. ACRA will start providing monitoring service in a new format on May 2011.
At the last meeting you said that ACRA is planning introduction of a subscription service i.e. a customer will receive unlimited volume of information for certain monthly payment…
Banks have joined the subscriber service stage by stage which was a very serious impetus for using information. At present, 9 banks have subscribed for information.
Parliament of Armenia passed a bill “On circulation of credit information and activity of credit bureaus” in September to create legal framework for activity of credit bureaus, regulation of credit data collection and preparation of credit report. What will such legal framework give?
ACRA was engaged in credit data turnover since 2004, but there was no relevant legislative base regulating creditor-borrower-credit bureau relations. The effective legislation allowed activity of the credit bureau, but it lacked necessary requirements and points on circulation of credit data.
ACRA-banks cooperation is now built on contractual basis, but these relations attained a new quality after the bill was passed. It provides provision and sharing of verified information. In addition, all the banks, credit companies and insurance companies provide data to the credit bureaus, which will allow forming a large-scale information base. Despite all this, we have had contracts with all the banks and most of the credit companies. Another important aspect in the law is protection of the rights of borrowers, who can dispute their credit histories or prohibit their use. The law also provides for provision of credit bureaus with the necessary technologies.
ACRA planned expansion of the network of information sources launching cooperation with insurance companies, organizations providing communal and household services, road police, courts and others. At what stage is that task?
In 2011 ACRA Credit Bureau will start providing information from insurance companies.
The problem with insurance companies will be solved faster, as the legislative field is already ready. We will start the negotiations by the end of 2010. The informative format is already approved. We need to solve the problem of the package – to conclude agreements with all
the insurance companies simultaneously. ACRA's shareholders are commercial banks and the
Central Bank of Armenia, which closely cooperate with insurance companies. Insurance companies will receive an access to ACRA's database with introduction of the second program of ACRA.
Within the frames of the measures taken by ACRA, agreements have already been concluded with ArmWaterCanal, which is the first non-banking organization providing information. Information is gathered in the second system of ACRA and will be available starting January 2011. I'd like to point out that the gathered information is high-quality information, which, to be honest, we did not expect from a non-banking organization. There is some problem with the telecommunication and electro-communication organizations, where some legal problems related to exchange and circulation of individual information should be settled. According to its strategic development program, in 2011 the Credit Bureau is going to solve these problems with the help of commercial banks and the Central Bank of Armenia, to raise this issue in relevant instances, which will allow ACRA to receive negative information from communication organizations, as well as from other companies providing communal and domestic services. This process is very difficult and long, as the matter concerns integration of huge information with the ACRA database.
Do you plan profits for the current year?
Yes, of course. Last year’s profits outstripped our expectations considering two circumstances: in 2009 we drafted a conservative budget for the crisis year - the ratio of the requests to credits grew amid falling number of provided credits. In addition, we offered a new service to banks that allowed receiving credit information from the ACRA base automatically from the consent of the given person. Two banks have already used this service.
All the 21 banks and 22 credit companies use the Bureau’s services.
Arthur Aslanyan
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