Brazil’s central bank has approved four credit bureaus to act as operators of the country’s positive credit database, or cadastro positivo.
Authorizations have been granted to SPC, Serasa Experian, Boa Vista and Quod. With these approvals, the bureaus can now receive data on borrowers from financial institutions.
The measure was seen as being the last necessary step for the system to go into effect, which was launched on July 9 without key rules for authorities to allow non-financial institutions to have access to financial data.
Without these rules, banks and non-bank companies were unable to share their clients’ payment information.
Brazil’s monetary council (CMN) had already issued regulations also deemed essential for the operation of the database.
The bureaus are now working on an unified system to standardize the sharing of information. This system is under development and should be ready by the end of the year.
The positive credit database was created in 2011 to be a payment history registry of «good borrowers», comprising information from both individuals and companies.
The main idea was to allow banks and other lenders to offer lower interest rates and faster loan approvals to borrowers with a positive credit history.
However, before the new law was passed, borrowers had to opt in to have their information in the database, which meant there was little information as many borrowers either refused to do so or forgot to join the system.
Furthermore, the system has the potential to expand access to credit, as even workers who do not have a formal job will be able to demonstrate their ability to meet their payment obligations, according to Serasa.
According to a study by the Serasa, the cadastro positive could benefit about 137 million Brazilians, or 88.5% of the adult population, 22.6 million of whom are currently outside the credit market.
The drop in interest rates could reach 74% of over 18s who now have access to credit.
Serasa also estimates that the adoption of the database could add up to 1.3tn reais (US$318bn) to the country’s economy.
Original Story: BNAmericas | News
Photo: Banco Central do Brasil
Edition: Prime Yield