The Central Bank of Nigeria (CBN) is now to licence and regulate activities of credit bureaux, going by provisions of the new CBN Act 2007.

Credit bureaux are new agencies being established to monitor credit worthiness of bank customers in the country. Their essence is to check incidence of loan defaults.
Under the new dispensation, banks are to exchange and share information on credit worthiness of customers seeking loans through these credit bureaux.
Although the Bankers' Committee had long played with the idea of establishing one credit bureau and had set up structures to facilitate its establishment, the committee was silent on the governance of its operations.

But with the enactment of new CBN Act 2007, more than one credit bureau can be established and all of them are to operate under the purview of the CBN.
So far, only one credit bureau, called Credit Reference Company, has been established in the country.
The company was formed by nine Nigerian banks in partnership with Accenture and the International Finance Corporation.

The new CBN Act 2007 gives express powers to the CBN to licence and regulate activities in these new organisations, saying that the appointment of CBN as the regulator was to enhance transparency in credit transactions in banks as well as enhance operations of the credit bureaux.

"This will enhance transparency in credit transactions of banks by making it mandatory for them to obtain credit information about prospective borrowers," it said.
The Act said that the apex bank had also been empowered to develop efficient and robust systems of transactions settlement including electronic payment, adding that this was in furtherance of the objective of promoting sound financial system in addition to facilitating cheque clearance.

It also empowered the apex bank to partner with regulatory agencies of banks in foreign countries on information exchange in relation to supervision of conglomerates and off-shore banks.
The Act provides for confidential treatment of shared information between the CBN and its foreign partners, saying that the assurance of confidentiality would make it easy for CBN to enlist co-operation of foreign supervisory authorities.

Operators have commended the decision of the government in bringing the operations of credit bureaux under strict supervision and said that it would help check abuses.

Mr. Mike Falade, a Lagos-based financial expert, commended the establishment of these agencies and said that their establishment would enhance the stability of the banking sector by putting an end to prevalent abuses in the system.