ACT NO. XI OF 2015
CREDIT BUREAUS ACT, 2015
A Bill to provide for the incorporation and functioning of credit bureaus and to provide for matters connected therewith and incidental thereto
[Gazette of Pakistan, Extraordinary, Part-I, 25th August, 2015]
No. F. 22(4)/2014-Legis., dated 24.8.2015.–The following Act of Majlis-e-Shoora (Parliament) received the assent of the President on the 19th August, 2015 and is hereby published for general information:-
WHEREAS it is expedient to provide for the incorporation and functioning of credit bureaus for collecting credit information relating to debtors of banks, financial institutions, non-banking financial institutions, non-financial companies and other lenders or authorities and maintain data of such information and also for the provision to disseminate such information, on request, for specified purposes with a view to facilitating efficient distribution of credit and for matters connected therewith and incidental thereto;
It is hereby enacted as follows:–
1. Short title, extent and commencement.–(1) This Act may be called the Credit Bureaus Act, 2015.
(2) It extends to the whole of Pakistan.
(3) It shall come into force at once on such dates as the Federal Government may, by notification in the official Gazette appoint.
2. Definitions.–(1) In this Act, unless there is anything repugnant in the subject or context,–
(a) “adverse action” means any action which causes a denial, rejection, cancellation of or reduction in or otherwise any unfavourable result in any transaction involving credit, finance, trade, commerce or employment with respect to a debtor;
(b) “banking” means the accepting, for the purposes of lending or investment, of deposit of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise;
(c) “banking company” means any company which transacts business of banking in Pakistan;
(d) “banking policy” means any policy formulated by the State Bank of Pakistan in the interest of banking or in the interest of monetary stability or sound economic growth, having due regard to the interest of the depositors, the volume of deposits and other resources of the bank and the need for equitable allocation and the efficient use of these deposits and resources;
(e) “companies Ordinance” means the Companies Ordinance, 1984 (XLVII of 1984);
(f) “company” means a company incorporated under the Companies Ordinance;
(g) “Court” means the Court of sessions having territorial jurisdiction in the area where the cause of action arises or offences committed under this Act;
(h) “credit bureau” means a public limited company established under the Companies Ordinance which has been granted a licence by the State Bank of Pakistan in accordance with this Act;
(i) “credit information” means any information with respect to a debtor relating to–
(i) the amounts, nature of loans or advances, finance and other credit facilities granted by a credit institution and repayment thereof by the debtor and the nature of security taken by a credit institution for credit facilities granted;
(ii) the guarantee or any other non-fund based facility furnished by a credit institution for the benefit thereof;
(iii) the amounts and nature of commercial transactions, facilities and services entered into or availed of credit from non-financial companies and bodies and other lenders and authorities including but not limited to retailers, insurance companies, utility providers and landlords as notified by the Federal Government;
(iv) any and all factors included in the financial history bearing on the credit worthiness, credit standing and credit capacity thereof;
(v) any other related public record and information as prescribed by rules; or
(vi) personal information as prescribed by rules;
(j) “credit information furnisher” means any credit institution, person or entity which provides credit information to a credit bureau including non-financial companies and bodies and other lenders and authorities;
(k) “credit information report” means any written or electronic communication issued by a credit bureau containing credit information relating to any debtor for the purposes of this Act;
(l) “credit institution” includes —
(i) a banking company;
(ii) microfinance banks;
(iii) a financial institution, which means:
(a) any company, whether incorporated within or outside Pakistan, which transacts business of banking or any associated or ancillary business in Pakistan through its branches within or outside Pakistan and includes a government savings bank but excludes the State Bank of Pakistan;
(b) a modaraba, leasing company, investment bank, financing company, unit trust or mutual fund of any kind and credit or investment institution, corporation or company; and
(c) any company authorized by law to carry on any similar business;
(iv) non-banking financial company; and
(v) any company, corporation or institution or class of companies or institutions as the Federal Government may from time to time, by notification in the official Gazette, specify for the purpose;
(m) “credit scoring” means a system whereby points are awarded to debtors enabling users to asses the credit worthiness and capacity of debtors to repay loans and advances and to discharge any and all other obligations with regard to credit facility availed of or to be availed of by the debtors;
(n) “debtor” means a person to whom finance as defined in the Financial Institutions (Recovery of Finances) Ordinance, 2001 (XLVI of 2001) has been provided, including those who have been credit recipients and who are potential recipients of credit as notified by the Federal Government;
(o) “default” includes omission or failure to perform a legal or contractual obligation involving credit;
(p) “licence” means the licence issued by the State Bank of Pakistan to a public limited company for the purpose of functioning as, and carrying out the business of, a credit bureau in accordance with the provisions of this Act;
(q) “person” means an individual, association or body of individuals, company, firm, authority, institution or any other entity;
(r) “prescribed” means prescribed by rules or regulations made under this Act;
(s) “regulations” means regulations made under this Act;
(t) “rules” means rules made under this Act;
(u) “Schedule” means a Schedule to this Act; and
(v) “user” means any person or body which obtains a credit information report from a credit bureau under this Act.
(2) The words and expressions used and not defined in this Act shall have the meanings as assigned to them in the Companies Ordinance, 1984 (XLVII of 1984), State Bank of Pakistan Act, 1956 (XXXIII of 1956) and Banking Companies Ordinance, 1962 (LVII of 1962).
3. Application of other laws not barred.–The provisions of this Act shall be in addition to, and not, save as herein after expressly provided, in derogation of, the Companies Ordinance, 1984 (XLVII of 1984), the Banking Companies Ordinance, 1962 (LVII of 1962) or any other law for the time being in force.
ESTABLISHMENT OF THE CREDIT BUREAU AND ITS CAPITAL
4. Licence.–Notwithstanding anything contained in any other law for the time being in force and save as hereinafter provided, no person shall commence or carry on business of or function as a credit bureau without obtaining a licence from the State Bank of Pakistan in the manner prescribed by regulations.
5. Eligibility for licensing.–(1) A person proposing to commence business as a credit bureau shall be eligible for licence under this Act subject to the following conditions or requirements, namely:–
(a) such person is incorporated as a public limited company under the Companies Ordinance;
(b) none of the promoters, sponsors, directors, officers or employees of such company being an individual, sponsor, director, chief executive or major shareholder in any company,–
(i) has been associated with any illegal banking business;
(ii) has overdue loan against any credit institutions that has not been settled with in last six months;
(iii) has been convicted of any offence involving fraud, breach of trust or moral turpitude;
(iv) has defaulted on payment of taxes and liabilities towards other government agencies; and
(v) has either been adjudicated as insolvent or has defaulted in payment of debt or has compounded with his creditors;
(c) the promoters of such company are persons of means and have special knowledge of matters which the company may have to deal with as a credit bureau and are not involved in the capacity of a director or shareholder with any company, business or activity which is likely to be in conflict with the business of the credit bureau; and
(d) none of the directors of such company shall hold such office with any other company, business or activity which is likely to be in conflict with the business of the credit bureau.
Explanation.–A company, business or activity shall be deemed to be in conflict with the business of the credit bureau, if it directly or indirectly competes with the business of credit information bureaus including but not limited to another credit bureau and financial institution.
(2) Without prejudice to the conditions specified in sub-section (1), the State Bank of Pakistan may impose such additional conditions as it may deem necessary on any company at the time of granting the licence or generally by regulations.
(3) The State Bank of Pakistan may refuse to grant licence, provided that–
(a) any of the conditions imposed under this section is not fulfilled; or
(b) the application for a licence has been made subsequent to the issuance of a notification regarding suspension of issuance of licences generally:
Provided that grant of licence shall not be refused without giving an opportunity of being heard.
6. Paid up capital.–The minimum paid up capital of a credit bureau shall be a minimum of PKR 250,000,000 or as may be prescribed by the State Bank of Pakistan from time to time but not less than 250,000,000/- should be fully subscribed and deposited as paid up capital of the company.
7. Shareholding.–(1) No person shall acquire more than ten percent shares of a credit bureau either directly or indirectly, except with prior written approval of the State Bank ofPakistan.
(2) Anyone who knowingly contravenes the provisions of sub-section (1) shall be punishable with a fine not exceeding one million rupees.
8. Credit bureau in existence prior to the commencement of this Act.–(1) Every person conducting the business of a credit bureau on commencement of this Act, other than the credit information bureau of the State Bank of Pakistan, shall before the expiry of the twelve months from such commencement, apply in writing to the State Bank of Pakistan for obtaining a licence to continue to carry on business of a credit bureau.
(2) In the event that the application for the grant of licence made by a person conducting business of a credit bureau on commencement of this Act is refused by the State Bank of Pakistan, such person shall cease operations as a credit bureau within such period as specified in the decision. The credit information collected, collated, stored and maintained by such person may not be sold to any entity other than a credit bureau and if the same is not sold to a credit bureau, for whatever reason, it shall be surrendered to the State Bank of Pakistan.
9. Power to suspend or cancel licence.–The State Bank of Pakistan may suspend or cancel a licence, if a credit bureau–
(a) ceases to carry on business of a credit bureau in Pakistan;
(b) fails to comply with or contravenes any provision of this Act or any conditions subject to which the licence was granted to it or any other law for the time being in force or fails to comply with or contravenes any rules or regulations, directions, guidelines or instructions issued under this Act:
Provided that no licence shall be suspended or cancelled without affording an opportunity to be heard.
REQUIREMENT TO PROVIDE CREDIT INFORMATION
10. Credit information furnishers to provide credit information.–Notwithstanding anything contrary to any other law for the time being in force or in any agreement entered into between a credit information furnisher and its debtor, credit information furnishers shall provide credit information to credit bureaus, provided that such credit information furnisher is a member of the credit bureau, to which credit information is being provided.
11. Membership of credit bureaus.–(1) Every credit institution shall become a member of at least one credit bureau with in a period as may be prescribed by regulations. The membership of other credit information furnisher, other than credit institution, to become a member of credit bureaus shall be notified by the Federal Government accordingly.
(2) All credit information furnishers upon membership of a credit bureau shall furnish credit information in accordance with the requirements and specifications.
(3) In case of termination of membership, the credit institution shall obtain membership of any other credit bureau either before termination or simultaneously to comply with sub-section (1).
(4) In case of failure to comply with quality standards and procedural requirements specified by credit bureaus, the membership of credit information furnisher either by the credit bureau on its own motion or at the direction of the State Bank of Pakistan may be suspended or cancelled, provided that an opportunity to show cause for the proposed action is given.
(5) Where a credit institution:
(a) abstains from becoming a member of at least one credit bureau; or
(b) at any time is not a member of any credit bureau–
such credit institution shall be liable to a fine not exceeding one million rupees and, where the contravention is a continuing one, with a further fine which may extend to fifty thousand rupees for every day during which the violation continues, provided that no penalty may be imposed by the State Bank of Pakistan without affording such credit institution an opportunity to show cause against the proposed imposition of penalty.
12. Accounts and balance sheet.–Every credit bureau shall on expiration of each calendar year prepare a balance sheet and profit and loss account in respect of all business transacted in that year by it.
13. Audit.–(1) The accounts of credit bureaus shall be audited by auditors who are chartered accountants within the meaning of Chartered Accountants Ordinance, 1961 (X of 1961) and are on the panel of auditors maintained by the State Bank of Pakistan for the purposes of audit of banking companies.
(2) Credit bureaus shall submit duly audited accounts to the State Bank of Pakistan within a period not exceeding three months of the date of closing of each calendar year.
POWERS OF THE STATE BANK OF PAKISTAN
14. Powers of the State Bank of Pakistan to give directions.–(1) Where the State Bank of Pakistan is satisfied that it is necessary and expedient so to do–
(a) in the public interest; or
(b) in the interest of banking policy; or
(c) in the interest of the credit system, credit bureaus, credit information furnishers, users and debtors in general or to prevent the affairs of a credit bureau being conducted in a manner detrimental or prejudicial to the interests thereof; or
(d) to secure the proper management of credit bureaus generally,–
it may formulate the policies, issue regulations, directions or guidelines to credit bureaus generally or to a credit bureau in particular, from time to time, as it deems fit and the credit bureau or all the credit bureaus, as the case may be, shall be bound to comply with such policy, directions and guidelines.
(2) The State Bank of Pakistan may, on representation made to it or on its own motion, modify or cancel any regulations, guidelines or direction issued under sub-section (1) and in so modifying or canceling any direction may impose such conditions as it deems fit, subject to which the modification or cancellation shall have effect.
15. Power of the State Bank of Pakistan to call for information.–(1) The State Bank of Pakistan shall have the power and authority to call for any information from a credit bureau regarding its business and affairs and to appoint inspecting officers to inspect its books, data, accounts, record and other documents.
(2) It shall be duty of every director, officer or employee of credit bureaus to produce all such books, data, accounts, record and other documents in his custody or power to an inspecting officer appointed under sub-section (1) and furnish to such inspecting officer any statement and information relating to the affairs of the credit bureau.
(3) An inspecting officer appointed under sub-section (1) may examine on oath any director, officer or employee of a credit bureau in relation to its business and may administer an oath accordingly.
(4) Any credit information report issued by a credit bureau shall be verified by the State Bank of Pakistan and no credit information report shall be valid unless verified by the State Bank of Pakistan.