Russian (CIS)English (United Kingdom)
New Publication:
New Publication:
New Publication:
Publications Calendar
< 06/2019 >
Mo Tu We Th Fr Sa Su
          1 2
3 4 5 6 7 8 9
10 11 12 13 14 15 16
17 18 19 20 21 22 23
24 25 26 27 28 29 30

Market of Consumer Credit History in Ukraine – 2

In the first part, I reviewed leading credit history bureaus operating in Ukraine. This part is focused on major problems on the credit history market and possible ways to solve them.

One of the major problems on the market is that banks do not submit information about their customers to credit history bureaus. Such approach compromises not specific banks in particular, but the credit system as a whole.

Many banks still believe that submitting credit history details of customers to a bureau may result in re-crediting of customers by other institutions. At the same time, some banks just do not see the point of wasting time and money to integrate their operations with a credit history bureau. What is the consequence of such practice? Applying for the new loan, a customer just forgets to specify other loans borrowed recently. As a result, financial institutions do not have proper information about current customer’s loans in the process of verification at credit history bureaus. So, a credit limit is calculated on the basis of information provided by a customer only.

Later on customers are unable to pay back their loans due to extensive financial liabilities, which results in bad debt on multiple loans (it stands to mention that the NBU reasonably advises banks to grant loans in the amount which monthly installments paid back by the customer do not exceed 30% of customer’s net income). A customer is more likely to repay the loan to the bank which debt collection department works more efficiently.

The NBU made an appropriate action by obligating banks to get an approval from customers to provide their debt recovery information to the credit history bureau. If the fail to do so, they are required to form reserves for loans without customer permit (unsecured loans). But unfortunately that’s where it is all ended; commercial banks receive clients’ permission, give loans, and…do not submit related details it to the credit history bureau.

In order to fix this situation, the NBU has to enforce banks to actually report to bureaus or form unsecure debt reserves, not only to get customers’ permission to share the information.