The National Assembly on Wednesday passed "The Credit Bureaus Bill, 2015" unanimously to regulate the business of private credit bureaus, providing a legal and regulatory framework for incorporation and functioning of credit bureaus in the country. The House also passed "The Legal Practitioner and Bar Councils (Amendment) Bill, 2014".
The Credit Bureaus Bill, 2015 was moved by Parliamentary Secretary for Finance Rana Muhammad Afzal. The House passed the Bill unanimously without any amendment.
The Bill approved by the Lower House of the Parliament empowers the State Bank of Pakistan to call for any information form a credit bureau regarding its business affairs and appoint inspecting officers to oversee its books, data, accounts, records and other documents and, if satisfied that any chairman, director, chief executive or any officer of a credit bureau has been or is likely to be in breach of the provisions of the act may for reasons to be recorded in writing be removed from the office or fined not exceeding 5 million rupees.
Reasonable opportunity to be heard against proposed action however would be provided under the act but in the event that the SBP is not satisfied with the explanation, the officer so removed shall vacate their office on the date specified and the vacancy would be filled in accordance with the Companies Ordinance.
The SBP would also be empowered to supersede the board of directors of the credit bureau if it is satisfied that the BoD of the credit bureau is or is likely to be detrimental to the interest of the credit bureau, its shareholders or public interest or interest of the credit information system in general or for securing proper management of such a credit bureau.
According to some main clauses of the Bill, (5) Eligibility for licensing:- (1) A person proposing to commence business as a credit bureau shall be eligible for license under this Bill 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 within 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 license 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.
According to clause 7 of the Bill, "7 Shareholding.- (1) No person shall acquire more than ten percent shares of a credit bureau either directly or indirectly, except with a prior written approval of the State Bank of Pakistan.
According to clause 9 of the Bill, "the Bank may suspend or cancel a licence, if a credit bureau- (a) ceases to carry on the 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 Bill.
Provided that no licence shall be suspended or cancelled without affording him an opportunity to be heard.
The clause fifteen also describe the power of the Bank such as "the Bank 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, records and other documents.
According to clause 17 of the Bill, "the Bank to appoint auditors for special audit- (1) Where the Bank is satisfied that it is necessary and expedient to do so in the public interest or in the interest of the credit system, credit bureaus, credit information furnishers, users or the debtors, it may, at any time, direct by written notice that a special audit of a credit bureau shall be conducted and the State Bank of Pakistan may by such notice or by a separate notice appoint auditors to conduct such special audit of- (a) the accounts of the credit bureau in relation to any transaction or class of transactions or for such period or periods as may be mentioned in the notice; and
Where the credit bureau has not complied with the requirements for audit under sub-section (3) of section 24 or where the State Bank of Pakistan deems that such an audit is required, it may appoint the auditors who shall comply with such notice and directions of State Bank of Pakistan and submit a report of such audit to the State Bank of Pakistan.
The Bank may issue directions in particular or in general with respect to the audit of credit bureaus conducted in accordance with this Bill and submission of reports.
The clause 33 deals with dispute issues, "Resolution of disputes,-(i) In the event that the accuracy, completeness or correctness of a credit information report or any part thereof is disputed by the concerned debtor, such debtor may notify in writing to the concerned credit bureau of the alleged error, such credit bureau shall resolve or take up the dispute with the credit information furnisher:
The credit information reports shall clearly identify the disputed credit information, if any.
According to clause 34, 35, 36 and 40 of the Bill, " 34Penalties.- Any person who contravenes or defaults in complying with any provision or requirement of this Act or of any rule or regulations made thereunder or obstructs the lawful exercise of any power conferred by or under this Act, shall, if no specific provision is made under this Act, the rules or regulations made hereunder for punishment of such contravention, default or obstruction, in addition to any other liability as provided for herein, be punishable with fine which may extend to five million rupees and where a contravention, default or obstruction is a continuing one, with a further fine which may extend to fifty thousand rupees for every day during which the contravention or default or obstruction continues.
Adjudication of fine or penalty.- Where only a fine is provided for any offence. contravention or default in complying with any of the provisions or requirements of this Act or of any rule or regulations made thereunder, it shall be adjudged by the State Bank of Pakistan provided that the person concerned is afforded an opportunity of being heard.
Application of fines or penalties.- (1) The Court imposing any fine or under this Act may direct that the whole or any part thereof shall be applied in or towards- (a) payment of costs of the proceedings; or (b) for such purposes as may be directed by the Court.
(2) Any amount recovered as fine or penalty, which is not applied as aforesaid, shall be credited to the Public Account of the Federal Government.
Appeal to the High Court.- Any person aggrieved by the decision, given by the State Bank of Pakistan, may within thirty days of the date of decision, prefer an appeal to the High Court."
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