BNM-WBG Credit Infrastructure Programme

4 - 8 April 2016

Kuala Lumpur, Malaysia

 

(Application Closed)

Access to credit for individuals and businesses is severely constrained in much of the developing world. Weak legal and regulatory environments for lending, combined with the lack of predictability for lenders, inability to leverage productive assets, and the absence of credit information, creates a lending environment that is unfriendly to micro, small, and medium enterprises and individuals.
 

Credit infrastructure is the set of laws and institutions that enables efficient and effective access to finance, stability, and socially responsible economic growth. Credit reporting, secured transactions, and insolvency and creditor/debtor rights systems are the main elements of credit infrastructure. Non-existent or poor credit infrastructure poses considerable risks and constrains financial institutions’ ability to expand their financial products and services.
 

The availability of credit information sharing, secured lending, and rules that govern distressed businesses and bankruptcy, significantly increases their willingness to support the underserved and unserved individuals and micro, small, and medium enterprises (MSMEs).
 

Besides boosting access to finance, credit infrastructure plays a crucial role in mitigating investor and creditor risk, reducing the instability that could be caused by high levels of non-performing loans. This, in turn, lowers the cost of credit. The possibility of using reputational, traditional, and non-traditional collateral helps individuals and MSMEs gain access to finance as well as more favorable and competitive financing options.

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