04 November, 2010

National Bank of Georgia, JSC Credit-info Georgia and management of commercial banks acting in Georgia, signed a Memorandum of Understanding over the unified database of credit-related information last week. “The approach to the client-related information is completely changed: there will be no more separate, so called “black lists”, President of National Bank of Georgia Giorgi Kadagidze said and added: “Protection of consumers’ rights is our current priority. To achieve this goal, the National Bank will embark on a number of profound

initiatives. The memorandum signed today is the first step in this direction”.
Has anything compelled Georgia’s banking sector to take such a radical step to become so loyal or is this an attempt to pull the wool over consumers’ eyes?
The said Memorandum says that “the commercial banks agree that, as a rule, the information in a person’s credit history or “Credit-info” about the “default” will not be the reason for the refusal of a credit”.
Credit-info Georgia was founded by some local banks in 2005, in order to exchange information about any potential borrower. Their  web site says that the Company “specializes in credit information and the provision of information essential to the decision making processes of banks, leasing companies and other organizations who lend money, provide services and goods in credit“ and ibid “Anyone needing information on customers, suppliers or other business partners will benefit from Creditinfo Georgia’s services.“  Have you paid attention? „Anyone needing information on a customer“...
Moreover, in his comment with EcoPalitra, Sandro Gomiashvili, General Director of “Credit-info”, stated: “Our customers are leasing and private companies. Before hiring new employees these companies check with us about whether these persons are in our negative database or not.” So, it means that along with its primary specialization of exchanging credit related information between banks, Credit-info puts a stick into the wheels of unemployed people trying to get jobs.     
As of 1 October the number of records in the database exceeded 2 000 000.With the total number of positive loans amounting to 1 115 443 while number of negative loans equaled 316 594. Who knows how many of them are still unemployed due to Credit-info’s “assistance”?
After the global crisis, local banks lost thousands of their customers. Some consumers lost desire to take credits due to the crisis and many others could not meet liabilities and pay back, which propelled them to the so called “black list”. The number of customers was dramatically reduced and the banks renewed their advertisement campaigns. For this purpose some banks even dared to announce that they would not consider “Credit-info” base for granting credits though later it appeared to be just a trick to gain their customers back.    
Georgian Journal had an opportunity to conduct a survey and polled 100 citizens. The question: “Do you trust the banks’ promise not to consider the information in a credit history in “Credit-info” as the reason for the refusal of a credit?” The result was really unexpected – 98 NO against 2 YES.
Another problem the “black list” members constantly face is a bank’s attitude towards its bad debtors. A good example is Taoprivatbanks’s warning letter to its customer we have acquired; in it we read: “After the time of above mentioned measures expire, you are guaranteed to face the following aftermaths:
Georgian banking and financial institutions will strongly refuse to serve your family members”.  Is this a warning or a threat?
For short comments about the said issues we contacted Bank Constanta and “Problem Loans Management Group.”
Melania Kuchukhidze – Head of Sales Department, Bank Constanta:
“During the last years the NBG has become very active about protecting customers’ interests and rights. This will contribute to making customer-bank relations more transparent and will raise the culture of customers.
Access to the consumers’ credit history is of utmost importance for any bank to choose appropriate banking product and to make appropriate decision. Information received from Credit-info database should be properly used for such decisions and not as an instrument for refusal.
I believe, the Memorandum signed by NBG, Credit-info and local banking institutions will serve as a loyal approach to the customers and will be used exactly for the above said purpose.
Our bank’s history proves Bank Constanta is well-known for its loyal approach to the customers. A perfect example of this is the number of devoted customers who have spent years with us. The said issue is regulated by our credit policy and based on the reasonable approach thanks to which the Bank takes some risks during collaboration with such customers. Though such approach has never hindered our risk management and in this area we are one of the best by lower risk data.
I dare say that in our Bank’s history a customer’s credit-related history has never been used as the only criterion for further collaboration. While some banks definitely refused to serve “black list” customers, we always were flexible in financing them, taking into mind circumstances and proof of income.
We are glad about having considered our customers’ interests much earlier than our competitors and we will follow the way we have chosen.
Zviad Chkhikvadze – General Director, “Problem Loans Management Group” Ltd.:
“Credit-info Georgia has been created for local banks to exchange information about their debtors. Somehow the information exchange procedures are misused and in some cases are absolutely illegal.
We all have heard about the bank confidentiality policy not to provide information third parties. Citizens constantly contact us stating that their rights are violated. For example, let’s say consumer takes out a loan from a bank and after some time this person loses his job, and obviously his source of financial income as well. His credit rating becomes negative and the borrower appears on the “black list”. After some time he gets a job again and wants to restructure the credit or to get a new loan with another bank and cover the previous one. Almost in all cases the customer’s loan application would be rejected. The answer is simple: ‘You are on the Credit-info’s “black list”. When a citizen has appropriate monthly income, a bank should not reject his loan application.
As to information being provided to any company related to its potential employees’ financial statement, this is a violation of a consumer’s rights and is followed by the acting law on a banking secrecy.
Any borrower bares sole responsibility for any bank liability and the family members must not be pressed and/or enforced in any manner to share the liability.”

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