Credit Information Sharing Environment in the Maldives

This paper describes the process of information sharing among banks and other financial institutions in Maldives.

The paper provides a brief overview of Maldives including its:

• Geography;
• Demography;
• Economy.

It then examines the financial sector and states that the financial institutions and non bank financial institutions existing in the sector include:

• Bank of Maldives;
• Branches of four foreign owned commercial banks;
• Insurance companies;
• Finance leasing company.

The paper discusses the scenario of banking sector stating that:

• They are the principal institutions in mobilizing savings and providing credit to private sector;
• At the end of 2003:
  • Total deposits stood at 55% of GDP;
  • Credit disbursement were 29% of GDP.
• Majority of loans were provided to the tourism sector.

The paper also describes the existing scenario of information sharing including number of institutions involved and states that:

• Information sharing amongst the institution is done in the form of confidential opinion report;
• There exists no system for online sharing of information;
• Sharing of list of non performing loans among the banks is done during the monthly meeting;
• Considerable time is involved in sending out requests and waiting for the information, thus delaying the processing of loans.

The paper elucidates the role of regulatory authority in the financial sector and highlights the legal and regulatory constraints in obtaining credit information. It concludes by stating the need for a credit information bureau for strengthening the credit sector and for processing loans faster.