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FAQs

Q.1 What is Karja Suchana Kendra Limited?

Karja Suchana Kendra Limited is the prime organization in the country which acts as the repository of credit information of the consumer and commercial borrowers of all the banks and financial institutions. It collects and collates the credit information from the Banks and Financial Institutions and disseminates them on request.

Q.2 How does KSKL work?

For credit providers to get more information of the credit applicant, they need to gain access to the applicants complete credit record that may be spread over different institutions. This information can be used to supplement other information to help banks and finance companies to make their decisions to grant credit. KSKL stores and provides these credit reports in the form of credit reports to the lending institutions who must first be members of the KSKL.

Q.3 Who are Consumers and Commercial borrowers?

Consumer borrowers are individual borrowers where as commercial borrowers are institutional borrowers that include partnership firms, proprietary concerns, private and public limited companies, etc.

Q.4 How old is the bureau's history in Nepal?

Credit Information Bureau was established in 1989 under Nepal Bankers Association. It was registered as a company in September 2004 and started its operation as a company from March 2005

Q.5 Who owns Kendra and what is the ownership structure?

Banks and financial institutions own KSKL. The commercial Banks have 65%, Development Banks 10%, Finance Companies 15% and Nepal Rastra Bank 10% ownership stake in KSKL.

Q.6 Who are the members of KSKL?

All the Banks and Financial Institutions who have got the operating license from Nepal Rastra Bank and are regulated by it have to be compulsorily registered in KSKL as its member. Only the registered members are entitled to receive credit information report and other services as provided by KSKL.

Q.7 What is the legal provision for the KSKL's operation?

KSKL operates through the provision made in NRB Act 2002 Article 88 and various Directives issued by it for its Operation.

Q.8 What are its Operating Principles?

Its operation is based on four pillars of system efficiency: Reciprocity, Data Format, Frequency and Quality.

» System efficiency
Uninterrupted services to the Users.

» Reciprocity
Requirements that all members provide data in order to have access of the KSKL’s service. The access of the type of credit report availed by a member depends upon the type of data provided by the member.

» Data Format
Data must be made available and submitted in a required format as provided by the KSKL.

» Quality
Information must be provided on time. It must be complete, accurate and error free.

Q.9 Does KSKL collect all the borrowers' records of banks and financial institutions? What are its scopes of data collection and information dissemination?

NRB regulation has made it mandatory for all the Banks and Financial Institutions to send the credit records of all borrowers borrowing equal to or more than NRs2.5million in a prescribed format to KSKL on a quarterly basis.

NRB regulation also mandates that Banks and Financial Institutions must receive credit information of the potential borrower from the KSKL, before the new credit extension, renewal, restructuring, and /or rescheduling of NRs1million or above facility.

Q.10 What happens if members fail to take credit information from KSKL before lending?

As per the NRB directives, Banks and Financial Institutions will be liable for the punitive actions by NRB if they fail to take the credit information from KSKL before any new loan disbursements. KSKL may inspect and supervise the member banks to see that this regulation is strictly followed and report to NRB in case of breach of this regulation by any member banks.

Q.11 What is the information contained in the credit report?

The KSKL report primarily contains the credit payment history of the borrowers. There are two major types of information that is contained in KSKL report. The first is the detail personal/general information about the borrower and second is the details about the loan, security and credit payment information of the borrowers.

Q.12 What specific information does both consumer and commercial credit information contain?

The Individual Credit Information Report contains the information about the borrower's name, address, individual identifications details (citizenship number, passport number, driving license etc), family details, concern details, details of credits (type of credit facilities, sanctioned amount, disbursed amount and date, loan number, account ownership, last payment dates, payment delay days, outstanding and overdue amounts, security types & settlements dates), previous enquiries and blacklist information.

The Commercial Credit Information Report contains the information about the name of the firm/company, registered address, registration number, PAN number, details of the shareholders and their concern details. The credit details have the information about the types of credit facilities, sanctioned amount, disbursement amount and date, loan type, account ownership, last payment amount & date, payment delay days, outstanding and overdue amount, settlement date, account reporting date, previous enquiries and blacklist information.

Q.13 Is the credit information safe in KSKL?

Credit Information Bureau maintains strict secrecy of the stored data and ensures that all the data are duly protected. The security of the data is the prime importance to KSKL and best international practices are adhered to keep the data secured. No disclosure will be made to any third parties about the information contained in KSKL.

Q.14 What are the benefits of Credit Reports?

The credit information reports will help lenders to make better judgments on their lending decisions. This will help to make the lending decision process fast, easy and objective. The good borrowers will be benefited in terms of getting better terms and conditions (such as lower interest rate), faster service and other additional incentives from the lending institutions.

Q.15 Does the credit report indicate whether credit should or should not be given?

The credit report only shows the factual information available and does not provide an opinion, indication or comment whether credit should or should not be granted.

Q.16 Who makes the decision to grant credit?

There are many criterions in NRB directives under which a borrower could be blacklisted. But the major criterions are as follows:

The member banks and financial institutions through whom borrower apply for credit make the credit decisions. KSKL does not grant or deny credit.

Q.17 Will KSKL know why the borrower has been denied the credit?

No, KSKL does not know.

Q.18 If credit application of the borrower has been rejected, will this appear in the credit report?

No. Members do not provide such information to the KSKL.

Q.19 Can the borrower get his Credit Information Report from KSKL?

No, individual borrower can not receive his credit information report from KSKL. Only the member institutes are entitled for the credit report. However, the individual borrower can get the copy of his credit report provided the lending institutions make a request to KSKL for the same. But in the case of Blacklist declaration, individual customer may receive it upon request to KSKL in writing.

Q.20 Do a borrower who has been refused for the loan from one bank may be refused as well from other banks?

Not necessarily. Different banks may use information contained in the credit report differently or take into account other factors when then they access borrower's application. Although one may deny credit to the borrower, another bank may take a different view and accept borrower's application

Q.21 Who are blacklisted as borrowers?

There are many criterions in NRB directives under which a borrower could be blacklisted. But the major criterions are as follows:

when the borrowers, who have the outstanding loans equal to or in excess of 2.5 million and whose principle and interest are overdue by a year
Bankruptcy or Disappearance of Borrower
Misuse of Credit Facilities by the Borrower
Inadequate or inappropriate security

Other circumstances such as:

Auction notice by the Bank or FIs for loan recovery
Borrower proven guilty by the court for forgery & criminal cases.
Borrower fails to repay debt even after the court notice issued in favor of Bank or FI.
Individuals who issue Bounced Cheque

Q.22 Who blacklists the borrowers?

It is the banks and financial institutions who recommend the names of the defaulted borrowers for the blacklist. KSKL includes the name of the borrowers into the blacklist only after the written recommendation by the banks & financial institutions. KSKL does not have the right to list and de-list any borrower into and from the blacklist.

Q.23 What are the criterions for removing from the Blacklists?

Apart from other criterions, the major criterions for removing from blacklist are:

On the settlement of loan account
Credit facilities rescheduled or restructured under the prudential norms of Central Bank.
Liabilities of the loan accepted by other person which is acceptable to the Board of Directors of the concerned Bank and FI