The microcredit regulator is set to launch a Credit Information Bureau (CIB) service for bringing more discipline in lending and borrowing process of the financial institutions.

The move comes as soon as the Micro-credit Regulatory Authority (MRA) has found recently loan overlapping by the lenders in absence of effective credit management.

“We are closely working with the central bank to set up the CIB by this year,” said an official. He said it will also help absorb shocks and prevent the dropout of borrowers.

CIB usually maintains records of an individual’s borrowing and payment records. These records are submitted to CIB of the central bank by the member banks and financial institutions, and this information is later on used to help evaluate and approve loan applications.

If CIB was established by the MRA, such records will be submitted by the MFIs including Grameen Bank and BRAC. The central bank had set up CIB on August 18, 1992 aiming to improve credit risks and reduce the extent of default loan in the country’s banking system.

The Microcredit Regulatory Authority (MRA) plans to launch a Credit Information Bureau (CIB) soon to bring more discipline in lending and borrowing process of the micro-credit financial institutions.

Earlier in February this year, Bangladesh Bank governor and also the chairman of MRA Atiur Rahman disclosed for establishing CIB for MFIs at the ‘Dhaka Microcredit Conference 2014’.

He had said, “MRA has been working for introducing CIB services for the streamlining of the micro-financers.’’

Another MRA official said the CIB will be as like as the BB. It will reduce transaction cost for both borrowers and lenders and bring down the demand for funds.

Once it is established, it would provide information on the credit flow to poor people in different areas of the country. It will help the MFs expand

operating areas and also help the government prepare its plan to reduce poverty in different zones.

Since its establishment in 2006, MRA gives licences to 732 MFIs with 1,900 branches across the country with about 20 lakh borrowers.