Personal Credit Information Database Starts
to Operate
In recent years,
the People´s Bank of China has been organizing commercial banks to build a
nationwide personal credit information database in line with the decisions
adopted by the 16th National Congress of the Chinese Communist Party
and the 3rd Plenum of the 16 the CPC Central Committee as well as
instructions from the State Council with regard to building a social credit
registry system. As a vital part of the infrastructure of corporate and personal
credit registry system, the nationwide personal credit database has officially
started its operation in January 2006.
Corporate and
personal credit registry is a major component in a social credit system and
serves as the cornerstone of a well-functioning modern financial system, and a
basis for preventing financial risks, maintaining financial stability,
promoting financial development and social harmony. The availability of a
full-fledged credit registry system is an important measure of a mature market
economy.
This database of personal
credit information, as a platform shared by commercial banks, collects and
keeps personal credit information such as borrowing from and repaying
commercial banks, credit card transactions and tendering guarantee, as well as
personal identity information, provides personal credit information online
inquiry service to commercial banks to satisfy their need in preventing and
managing credit risks, and serve the need of monetary policy conduct and
financial regulation. The personal credit information database enables
information sharing among commercial banks, facilitating borrowing and
preventing credit risks; at the same time, privacy and information security
will also be protected. Inquiry can be made through the personal credit information
database only with the authorization in writing by the person involved when
personal loan application or credit card application is being reviewed, offer
of guarantee by an individual assessed, or personal loan or credit card
monitored for credit risks on a continued basis.
The database was
initiated in early 2004; in December 2004, the system started to operate on a
trial basis, with a network covering 7 cities and participated by 15 national
banks and 8 city commercial banks. In August 2005, all the national banks and
rural credit cooperatives that were technically ready joined the network and
the trial operation. After one year of trial operation, the system was
officially launched in January 2006.
The database now
contains personal identity information of 340 million natural persons, out of
which 35 million have credit record. At end 2005, the database contained
information of a total of 2.2 trillion yuan worth of personal loans
outstanding, accounting for about 97.5 percent of the total consumer credit
outstanding in the country. Wherever a natural person borrows or repays loan in
the country, provides basic information when opening a settlement account with
a bank, the information thus generated will be kept in the database and can be
accessed by credit review staff of commercial banks with written approval from
the person in question. Many commercial banks have made inquiry with personal
credit information database part of the established pre-lending assessment
procedure. Personal credit information database has opened 52,000 user
terminals at commercial bank branches throughout the country, and the number of
credit report inquiries averages at 110,000 daily. This system has contributed
to higher credit review efficiency, more convenience in borrowing, prevention
of non-performing loans occurrence and over-indebtedness on the part of
borrowers, and helped to set interest rate on the basis of credit risks.
The People´s Bank
of China will strengthen consultation and cooperation with other government
agencies and institutions, continue to improve the personal credit information
database by gradually including complete personal identity information and
relevant credit information from social security department, house providence fund,
tax authorities, schools, courts, and other public institutions, consolidate
the debt information scattered in all these institutions and turn them into
personal wealth that can better serve individual citizens and the whole
society.
By establishing personal
credit files and having the past credit behaviour of a person affect his/her
future credit activities, the database uses institutional constraint to help
individual citizens to have better credit awareness, respect contract and abide
by law, thereby building a social atmosphere that values honesty and
credit-worthiness. The operation of the database will greatly promote the
building a social credit system and improve credit culture in China.
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