Focusing on responsible lending and borrowing for the betterment of Personal Credit

Lions Club Colombo Host District 306A1 recently concluded the third session of the Money Matters webinar series, “Money Matters 1.2 – Personal Credit – a good, bad and ugly?’’. This webinar series is a yet another social endeavour by Lions Club Colombo Host, which aims to enhance financial literacy and inclusion in Sri Lanka.

The Money Matters 1.2 session was held with the participation of an elite speaker panel including Mr. M.R.N Rohana Kumara, Deputy General Manager, (Recovery Provinces, Business Revival and Rehabilitation) Bank of Ceylon, Mr. Nandi Anthony, Director/ General Manager, the Credit Information Bureau of Sri Lanka (CRIB), Mr. Nadeesha Senaratne, Country Head of Retail Banking and Wealth Management HSBC Sri Lanka, Mr. J.P.R Karunaratne, Assistant Governor, Central Bank of Sri Lanka and session moderator Mr. Asitha Pinnaduwa, Certified Expert in Financial Inclusion Policy, President Lions Club of Colombo (Host) 306A1 2021-22.

Mr. Asitha Pinnaduwa while giving a fitting introduction to the session went on to emphasize that citizens should pay attention to personal finance at a time when the country’s economy has contracted due to the Covid-19 pandemic. The main objectives of the session was to understand personal credit, how personal credit debt affect personal finance and explore ways to manage it while the speakers shared expertise and knowledge in their respective fields.

Mr. Karunaratne set the tone for the session by discussing the role of the CBSL in securing an efficient monetary finance and payment system. Answering to a question on the importance of the growth of consumer credit to the overall economy, he said, “Consumers’ ability to borrow money easily allows a well-managed economy to function more efficiently and stimulate economic growth.” According to him, the demand for consumer credit paves the way for innovation and entrepreneurship, which accelerates the economic growth. He came up with several research findings to emphasize that consumer credit helps to increase the GDP, which in turn boosts the economy. 

He further elaborated on the fact that due to abundance of informal money lenders, a considerable number of people from grass root levels continue to borrow through them, which is one of the main reasons for the low percentage of credit access (45%) in the country. He pointed out several other reasons for this low percentage such as lack of collaterals in the informal financial sector and low financial literacy.

Mr. Rohana Kumara, during his turn focused on the aspect of loans and described why banks are extra vigilant when lending, given that they are lending the depositors’ money. He emphasized that banks can be reluctant to approve loans if the consumers’ past track records are weak, due to uncertain scenarios such as longer tenures where banks will require a collateral. He highlighted that if the past loan records are good, the customer has a higher advantage of negotiating the terms and conditions to suit his/her requirement. He also came up with valuable advices to consider when applying for loans.  He suggested that the individuals who are applying for a loan need to be better prepared when meeting the lender and they need to be confident enough to discuss about their purpose of borrowing. Since, financial institutions often inquire about the status, health and CRIB records of a borrower, he recalled the importance of keeping good credit records.

Mr. Nadeesha Senaratne focused on the aspect of responsible lending and borrowing where he discussed the importance of understanding the target borrowing segments, why they need to borrow money and for what they borrow. He highlighted the importance of having a credit bureau, which gives adequate understanding of the total debt of a consumer while it encourages the consumers to maintain good credit records.

He also emphasized the fact that while increasing the lending business, it is necessary to create awareness among consumers to invest properly and the need to improve digital infrastructure to make financial services more accessible to them.

Mr. Nandi Anthony in his turn discussed the role of the Credit Information Bureau of Sri Lanka (CRIB) and its contribution to personal credit. He noted that the public has misunderstood the purpose of the CRIB and went on to share that it has been established to ensure financial stability, responsible lending & borrowing and propagate credit. While giving more background information on the CRIB, he reiterated that it is a statutory body with a board of Directors. He emphasized that the CRIB has nothing to do with blacklisting and it is only a facilitator of lending where lenders can find information about past lending records, which helped the audience to clear several myths and doubts regarding its services. Finally, he suggested everyone to keep the credit records healthy; describing it as a reflection of one’s behaviour.

The Money Matters 1.2 session ended after enlightening the audience to valuable insights on personal credit, loans, the role of the CBSL and CRIB in facilitating Personal Credit, importance of responsible lending & borrowing and investing one’s credit properly.

Photo Caption : ( From Left to Right )

Mr. Asitha Pinnaduwa, Certified Expert in Financial Inclusion Policy, President Lions Club of Colombo (Host) 306A1 2021-22, Mr. Nadeesha Senaratne, Country Head of Retail Banking and Wealth Management HSBC Sri Lanka, Mr. J.P.R Karunaratne, Assistant Governor, Central Bank of Sri Lanka, Mr. Nandi Anthony, Director/ General Manager, the Credit Information Bureau of Sri Lanka (CRIB), Mr. M.R.N Rohana Kumara, Deputy General Manager, (Recovery Provinces, Business Revival and Rehabilitation) Bank of Ceylon