CRIB now youthful at 25: But risks of reaching maturity and old age are inevitable

CRIB at 25 brings new challenges

The Credit Information Bureau of Sri Lanka, popularly known by its acronym CRIB, just completed 25 years a few days ago. The Bureau had a grand celebration coinciding with its Annual General Meeting last week in Colombo. The occasion was used to felicitate the founders, big and small, for the yeoman service they provided to nourish that institution at its infancy so that it could grow into a strong youth later. 

This writer, as its founding General Manager, witnessed how CRIB grew from a ‘seed’ planted in the Central Bank in late 1980s into a baby and then to a youngster commanding recognition from all those who have an interest in it. It is therefore time to revisit its genesis to appreciate the arduous journey it has trod so far from its humble beginning in 1990. Growing into impeccable youth is an achievement, but its next phase in life brings new challenges that cannot be ignored.  

 

The forefathers of the Bureau

CRIB was a creation of a small team of dedicated men and women.

Sri Lanka had felt the need for a credit information bureau for some time. As far back as 1985, an internal paper prepared in the Central Bank by its Development Finance Director H.M.R. Ellepola had argued for the establishment of a credit information bureau in the country. The reasoning behind the proposal was that there had been a systematic default of bank loans by crafty bank borrowers taking advantage of banks’ inability to verify their past track records, moving from one bank to another and creating a chain of loan defaults in the process. However, there was no sufficient political will to go ahead with the proposal presumably due to the pressure exercised by some interested groups. 

In that scenario, it was due to the bold leadership given by the late Dr. H.N.S. Karunatilake, Governor of the Central Bank, the late Deshamanya N.U. Jayawardena, Chairman of Sampath Bank and Dr. S.T.G. Fernando, Deputy Governor of the Central Bank and first Chairman of CRIB that the country saw the birth of a credit bureau in 1990. The spade work for them to accomplish this task had been done by three other Central Bank officers, namely, Bank Supervision Director P.T. Sirisena, Legal Officer Senehelatha Abeywickrama Perera and Secretary W. Jayasena.

The writer came into the picture in June 1990, only after the initial work including the enactment of the Act had been completed.

 

A team of magnificent six

At the time the writer was handpicked by the Central Bank’s management to be CRIB’s first General Manager, he was a Deputy Director in the Bank’s Economic Research Department and did not have any experience in forming or running a credit information bureau. Nor did the officers who were selected by him from the Central Bank to form the bureau have that experience. Hence, for him as well as for the small team of officers, it was like walking into the unknown. Yet, the morale and enthusiasm in taking up those unknown challenges were running very high and everyone was eagerly looking forward to the new experience waiting ahead of them.

Who were the people in this team? There were five officers handpicked from the Bank. The Bureau’s administration was to be handled by Anula Premachandra who was a Senior Assistant Director of the Bank. Its IT section was to be handled by a single person, N.M. Jayasekara, Computer Programmer. Its accounts and general administration were to be handled by two other officers, Gunapala Gamage and K.D. Kasthuriratna, respectively. All the secretarial work including the initial data entry was to be done by Jayantha Amarasinghe. The writer recalls walking into the Ceylinco House in early June 1990 with this small team and setting up temporary office there planning, organising and establishing the bureau.

 

The first Board

The Central Bank had appointed Deputy Governor Dr. S.T.G. Fernando as the Bureau’s Chairman and Bank Supervision Director P.T. Sirisena as member representing the Bank on the Board. The writer had to initiate the formation of the Bureau under the guidance of these two senior officers. To his credit, Governor Karunatilake did not interfere in that work and had left it entirely in the hands of the Chairman and the writer. 

The initial Board was to consist of two from the Central Bank of which one was the Chairman, one each from the two State commercial banks, two from the other commercial banks and one from the development banks and savings banks. The writer recalls the Chairman of being very particular about who sat on the Board. When one State commercial bank had nominated a fairly junior officer to represent that bank on the Board, the Chairman spoke to its General Manager and prevailed upon her to appoint a very senior officer from that bank to the Board. All other banks had appointed CEOs of different banks to the board. The Chairman’s view was that the board should consist of people of equal stature and position to bring dignity, credibility and reputation to the Bureau.

At the very first Board Meeting, the writer’s appointment as General Manager and Secretary to the Board was confirmed. On a proposal by the Chairman, the Board also resolved to forgo any allowance payable to them as Board members until the Bureau’s financial position became sufficiently strong to make such payment.

 

Study Tour in Malaysia and Thailand

Sri Lanka did not have any experience in running a credit information bureau. Hence, the Chairman suggested that board member P.T. Sirisena and the writer undertake a study tour in credit information bureaux in both Malaysia and Thailand entirely funded by the Central Bank. Accordingly, the two officers now forming into a visiting Sri Lankan team spent one week each in July 1990 in the respective credit information bureaux. 

In both these countries, credit information bureaux were sub units of the respective central banks and information was being collected under the powers given to central banks by statute to collect information from banks. In that respect, Sri Lanka had been one step ahead of these early starters with its special legislation empowering the bureau to collect credit information from member banks and release the same on demand by them and indemnifying the bureau or the officials working in the bureau from any legal suit by an aggrieved customer of a bank. 

The advice given by both bureaux to the visiting Sri Lankan team was that, as they also had done, the software for running the bureau should not be developed in-house but procured from outside. The reason adduced was that developing software in-house was cumbersome, time-consuming and incomplete. This was one area where Sri Lanka did not heed to the advice given by the two experienced bureaux.

 

The acronym and logo

The Bureau had to choose an appropriate acronym to project itself to the outside world. Out of many shortened forms, on a suggestion by the Chairman, the Board finally chose CRIB, which had taken the first two letters from CRedit, ‘I’ from Information and ‘B’ from Bureau. According to the Oxford Dictionary, CRIB had three different meanings: a covered bed for an infant, dishonest copying and information presented in a quick simple way. It was this last meaning which the Board attributed to the Bureau. 

Then came the question of designing the logo of the Bureau. For that, artist Padmanjalee Dahanayaka who had been designing coins for the Central Bank was engaged by the Bureau. Out of many designs she had prepared, which were all eye-catching and meaningful, the Board adopted the current logo of the Bureau in which CRIB has been written in horizontal black and white lines. The black lines denoted adverse track records of borrowers, white favourable ones and, hence, CRIB stood for ‘adverse and favourable information presented in a quick and simple way’. 

 

Acquisition of IBM AS 400 mini-computer system

The Bureau had to acquire a computer system and for that, it was decided to go for an IBM AS 400 mini-computer which was the best available in the market at that time. Instead of buying this computer outright and thereby blocking the funds of the Bureau in a fixed asset, it was also decided to obtain it on a lease-purchase basis over a four year period under a lease facility offered by one of the member banks, namely, DFCC. However, when acquiring this computer, the Bureau being a private sector organisation, did not follow the government procurement procedures. 

The Bureau’s auditor at that time was the Auditor General and in his first audit report to the Parliament, he had reported it as an irregularity in its procurements. The Committee on Public Enterprises or COPE, having reviewed the Auditor General’s Report, summoned the Board and the writer before the Committee to seek an explanation. The Chairman of the COPE, Rohan Abeygunasekera, accepted the position of the Bureau that it was a private sector organisation and it had to acquire this system as quickly as possible to serve its shareholders and therefore it could not run the risk of going through the cumbersome government procurement procedures. 

The writer recalls the Bureau being advised by the COPE to have the Act amended taking out the Auditor General from his audit function and permitting private auditors to do that job. This suggestion had the consent of the then Auditor General – Gamini Epa – who had found fault with the Ministry of Finance for making Auditor General the auditor of a private company without first consulting him. Hence, the desired amendment had everyone’s blessings and it was carried subsequently.

 

The genius software developer

After the acquisition of AS 400 mini-computer, the challenge was to develop the software system in-house to commence the business operations of the Bureau before the end of 1990. This task singularly fell upon the Bureau’s IT man, the silent but a genius of a programmer, N.M. Jayasekara. He had no previous experience in AS 400 or the language which it used for programming; his experience in the Central Bank had entirely been in the IBM 4300 mainframe. Hence, he had to first undergo training in AS 400 at IBM before even thinking of developing the needed software. 

The beauty of Jayasekara was that though he was a silent and unassuming person, when it came to work, he was like a duck to the water. In the mornings, he was at IBM undergoing training. In the afternoons, he was at his new machine punching keys, examining the results on the screen, erasing them if they did not come up to requirements and redesigning the formats. 

He and the other members of the team had to work in a double quick time, because when the Bureau was soft-opened by the Prime Minister and Minister of Finance, D.B. Wijetunga, in August 1990, the deadline given to them was that the first credit report should be released by the Bureau before the end of the year. Jayasekara took this challenge seriously and worked so hard that by end October, his software programme was ready for testing.

 

Morning site meetings

In the meantime, the other members of the team were busy with the rest of the work. To facilitate data collection, data entry and data retrieval, a half a dozen school leavers were hired by the Bureau as multi tasked officers. They were all in the age category of 18 to 20 years and did not have previous work experience. Hence, to rely on them to produce results within a short period of time was considered taking a huge risk. Yet, all these young men and women proved to be marvellous workers full of high morale, spirit and enthusiasm. 

There were site meetings every morning from 8.30 to 9.30 to discuss the progress, issues and solutions. All members were encouraged to speak at these meetings and it was these youngsters who made the best contributions because it was they who actually faced the real ground problems. When Jayasekara was ready with the software, the rest of the team was ready with the data. 

In the month of November, the data were entered to the system, mock credit reports were produced and examined for shortcomings. The system was thus geared for its final D-day that was to be the first working day of December. To release the credit reports to member banks, a Fujitsu tele-facsimile machine, now popularly called a fax machine, was acquired by the Bureau. 

 

The first credit report

The writer recalls the excitement that prevailed in the Bureau when it issued its first credit report in the first working day of December 1990, nearly one month before the deadline given to it at the soft-opening. The request had been made by the Manager of the Anuradhapura Branch of the Sampath Bank. 

According to the internal procedures of the Bureau, the request was authorised by Anula Premachandra, the Bureau’s Senior Manager. Then, it was attended to by one of the multi-tasked youngsters under the supervision of K.D. Kasthuriratna, Manager Administration. The produced credit report was checked and rechecked by two others, a multi-tasked youngster and Gunapala Gamage, Manager, Accounts. Then, it was signed by the writer who was the only authorised officer to sign credit reports on behalf of the Bureau. The fax machine was operated by Jayantha Amarasinghe, Secretary, when everybody, including the silent Jayasekara, had gathered around it anxiously. 

The fax was sent and within minutes, a call came from the Manager of the Sampath Bank’s Anuradhapura Branch thanking the Bureau for the prompt report it had sent. 

 

Rejoicing a job well done in a humble manner

The mild and satisfying smile that crossed the faces of all those who had been gathered around the fax machine that morning was a pre-sign of the greater heights to which the Bureau was to rise in the years to come. At the inception, CRIB issued only less than 20,000 credit reports a year and even that was beyond its capacity. Today, it issues more than 4.6 million credit reports a year, making it an indispensable partner in sanctioning good credit lines by financial institutions.

 

Youth can grow into maturity and old-age 

CRIB today is a youth having gone through a gestation period.  But a youth will reach maturity and from maturity, old-age. This is the normal lifecycle of any bureau as identified by the Princeton University Political Scientist – Marver H. Bernstein – in his 1955 book titled ‘Regulating Business by Independent Commission’. However, according to Bernstein, it also carries challenging risks too. 

In its youth, a bureau acts like a crusader ready to change the world around it. But once it reaches maturity, which is the next phase for CRIB, it becomes reactive rather than proactive, with inefficiency creeping into its life at every point. A bureau will get into this position when it has no challenge because it is praised by everyone for its success. Then it moves to old age with this inefficiency on its back. Once it reaches old age, according to Bernstein, it is as good as dead and it is considered it has lived its useful life. 

 

Refrain from abusing CRIB reports

Hence, CRIB’s current challenge is to avoid maturity and old-age and remain youthful forever. It can do so, only by introducing new technology continuously and remaining useful to its customers at large. If the credit reports issued by CRIB are misused or abused by the market by insisting a CRIB clearance even for job offers, as it is reported today, it will soon become a hindrance rather than a useful element. 

It is therefore important that credit reports issued by CRIB are used only as a pointer in credit appraisal and not as a reference certificate for all other dealings.

(W.A. Wijewardena, a former Deputy Governor of the Central Bank of Sri Lanka, can be reached at [email protected].)