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Credit Bureau:
the Case of Jordan
Dr. Adli Kandah
Director General
Association of Banks in Jordan
Workshop on Support for Euro-Mediterranean industrial cooperation
regarding Dimension 4 of the Euro-Mediterranean Charter for Enterprise:
Access to Finance, Milan 13 - 15 December 2011
Steps undertaken to establish a private
credit bureau company in Jordan
First
Legislative
framework
Second
Practical measures
undertaken to
establish credit
bureau company
2
First
Legislative framework
regarding the establishment of
credit bureau company
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A) The Issuance of Credit Bureau Law, June 2010
 The issuance of credit Bureau Law No (15) for 2010 in the Official
Gazette (No. 5034 dated 1/6/2010).
 According to article (3), the CBJ has appointed the company's
license in accordance with terms and conditions determined by a
special regulations issued by the CBJ for this purpose.
 Article (6), stated that the CBJ shall supervise the company and its
regulation and control.
 Item B of article (5) stated that the company should be a limited
liability or a private company, the participation or contribution as
appropriate is exclusive to banks or any other legal persons with the
consent of the Central Bank. Item (C) of the same article
confirmed of making any changes in the ownership of shares or
stock of the company without the approval of the Central Bank.
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A) The Issuance of Credit Bureau Law, June 2010
 Article (6) stated that The CBJ will supervise and control the
company and organize its operations through :
1. Adoption of the company's standards to ensure that it is
dealing with credit information and credit reports as
specified in this law (accurately, fairly, and objectively).
2. Organizing the use of credit information among relevant
parties.
3. The adoption of credit-point program prepared by the
company for the purposes of providing numerical indicators
determine the customer's credit status.
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A) The Issuance of Credit Bureau Law, June 2010
 Article (7): stated that the credit report should be requested
only in accordance with the provisions of this law and for the
purposes of assessing the credit status of the client and his
financial capacity in any of the following cases:
A. the customer’s credit request from credit provider, or
request to increase the amount of credit or reschedule or
change the terms and conditions of the credit contract.
B. the query about the reasons for non-payment the
amounts of credit granted to him or delay in payment.
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A) The Issuance of Credit Bureau Law, June 2010
 Article (8) prohibited the following actins under penalty of
legal liability:
A. Credit provider shouldn’t Request any credit information
or credit report from the company without obtaining the
access authorization from the client.
B .Data provider shouldn’t provide any credit information
relating to any client without the access authorization.
C. the company shouldn’t provide any credit information, or
issue any credit report without the access authorization.
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A) The Issuance of Credit Bureau Law, June 2010
 Article (9) stated that the Company may obtain credit
information mainly from: any other credit bureau company,
Banks and financial leasing companies, any company that sells
on credit, financial institutions.
 Article (11) stated that the company's activities include the
following:
A. collection, storing, and handling the credit information in
accordance with the provisions of this law.
B. Preparing a database regarding customers.
C. Preparing credit reports according to forms approved by CBJ.
D. Identify customer's credit status according to the approved
credit point program.
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A) The Issuance of Credit Bureau Law, June 2010
 Article (12) stated that the company is obligated to:
A. Marinating credit information and any modification on it.
Complying with the service fees approved by the CBJ.
B. Providing the CBJ with the names of data providers that
the company deal with.
C. Establishing customer service unit .
 Item A of Article (13) stated that it is not allowed for any
credit or data provider to own more than 5%, directly or
indirectly, of the capital of the company, item (b) of the
same article stated that it is not allowed to a credit and
data providers together to possess more than 49% of the
company's capital.
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A) The Issuance of Credit Bureau Law, June 2010
 Article (14) stated that data provider should comply with the
following :
A. Providing the Company with credit information related to
the any customer or any changes that may occur throughout
the duration of the agreement between them.
B. Keeping the written access authorization.
C. providing evidence of obtaining the credit information in
legal manners.
 Item A of Article (15) stated that the company should sign an
agreement with each credit provider to organize their access to
credit reports and other related service. While Item B stated that
the company is prohibited from signing any agreement with any
credit provider that is not data provider.
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A) The Issuance of Credit Bureau Law, June 2010
 Article (19):
A. credit provider who wishes to obtain service from the company
should inform the customer with the following :
1. the purpose of obtaining credit information.
2. the right to access his own credit information, to correct any
error, and to object on that information.
B. Credit provider should keep the access authorization throughout
credit period.
C. When Credit provider rejects the client’s credit request because
of the negative points in his credit report, the provider should
provide the client with a copy of his credit report.
 Article (20): the client has the right to obtain his own credit report
from the company free of charge for one time annually.
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B) The Issuance of Credit Bureau Regulations, July 2011
 In 8/7/2011, the Credit Bureau Regulations No. (36) for the year
2011 were issued in accordance to paragraph (a) of Article (32) of
the Law of the Credit Bureau No. (15) for the year 2010.
 Article (3) stated that the minimum paid in capital for the
company shouldn’t be less than JD 2 million (about USD 2.8
million).
 Article (4) stated that the founders of the company apply the
license application to the CBJ, including the following :
A. The name of the company, its set of Bylaws and articles of
incorporation, and the location of its headquarter.
B. The names of its founders and the nationality of each of them
and the nature of their activity, the amount and percentage of
ownership in the companies capital, directly or indirectly, and a
proof of financial solvency for each of them.
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B) The Issuance of Credit Bureau Regulations, July 2011
C. The authorized capital of the company.
D. Action plan for the first three years from the date of establishment,
including the actions and procedures for collecting, entering,
retrieving the information and the security and protection of credit
information and credit reports and its confidentiality.
E. The company’s database management plan, systems, devices,
equipment and software to be Used, update mechanism, security
measures, and the protection of its database.
F. The organizational structure of the company.
G. Budget estimates for the first three years from the anticipated date
of issuing the first credit report.
H. The audited financial statements for each founder for the last two
years.
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B) The Issuance of Credit Bureau Regulations, July 2011
 Article (8): No shareholder or partner in the company can
make any agreement to control, directly indirectly, more than
(50%) of the capital of the company without a prior written
consent of the CBJ.
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Second
Practical measures
undertaken to establish
credit bureau company
15
A Study About Credit Bureau companies in Jordan, Oct. 2010
 ABJ has prepared a study on credit bureau in Egypt and
Bahrain in comparison with the Jordanian credit bureau Law
No. (15) of 2010, and was presented to the Association's Board
of Directors who decided to circulate the study to all member
banks.
 In December 2010, ABJ addressed banks to solicit their initial
interest in establishing a Jordanian credit Bureau company
according to the credit Bureau law No. (15). ABJ has received
positive responses from banks indicating their willingness to
participate in establishing a the credit bureau company.
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The Formation of a Steering Committee, March 2011
 A meeting was held with the Governor of the CBJ, to discuss
the establishing of a credit bureau company.
 Based on this meeting and in order to follow-up the
establishing of a credit bureau company in Jordan, the ABJ
Chairman decided to formulate a temporary steering
committee that comprises ABJ, CBJ, and some banks in
Jordan.
 The first meeting of the steering committee was held in May, 5
2011. The committee recommended to invite all parties that are
interested in establishing a credit bureau company in Jordan.
 Accordingly, ABJ send an invitation to all interested parties
including banks, financial institutions, insurance companies,
etc.
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The First Consultative Meeting, June 2011
 In June 2011, ABJ held the first consultative meeting regarding the
establishing a credit bureau company in Jordan. Many Parties recorded
their names in a list comprises the names of all interested parties that
have the willingness to participate in establishing the credit bureau.
 The IFC expressed its interest in the credit bureau in two ways:
 Contributing in the capital of the credit bureau company.
 Providing technical support in establishing the company
particularly regarding attracting a strategic partner. The IFC
indicated several scenarios to attract a strategic partner:
o Launching International tender.
o Selecting the strategic partner through direct hiring with the
assistance of the IFC.
 ABJ suggested to perform a study to investigate the nature and the
share of the strategic partner, and recommended to link the share of
the strategic partner with his role in terms of the administrative and
technical aspects.
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The Steering committee meeting with the Governor of CBJ,
July 2011
 In July, The steering committee met the Governor of the CBJ in
order to follow-up the establishing of credit bureau company in
Jordan, and to discuss the shares of interested parties and the
strategic partner in the company.
 ABJ presented a study about the possible scenarios and the
allocation of shares among interested parties in establishing the
credit bureau company in Jordan.
 The Governor of the CBJ and the steering committee suggested
the following scenario for the capital of the credit bureau
company.
 ABJ contacted all related parties including Electric and
Telecommunication companies, as well as IFC. Also, ABJ
contacted the legal committee of ABJ to study all legal
procedures required to establish the credit bureau Company.
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The suggested distribution of the capital of the credit
bureau
No.
Party
1 Performing banks in the kingdom
the amounted to 26 banks.
2 Loan Guarantee Co.
3 telecommunication companies in
Jordan (3 companies)
4 electric companies in Jordan (3
companies).
5 Social Security Corporation
6 IFC
7 Strategic partner
Total
Value (in JD)*
Share (%)
(26%)
520.000
( 1% for each bank)
1%
20.000
( 3%)
60.000
( 1% for each company)
( 3%)
60.000
(1% for each company)
10%
200.000
10%
200.000
A portion not to exceed
660.000
33%
86%
1.720.000
* Assuming that the minimum capital is JD2 million.
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The Steering committee meeting, August 2011
 In August 2011, the steering committee and IFC held a number
of meetings to discuss the "roadmap" for completing the
establishment of a private credit bureau in Jordan.
 An expert from IFC briefed the committee on the experience of
other countries in establising credit burueas.
 The steering committee agreed the following scenario for the
company's capital:
 Banks: 26%, 1% for each bank.
 The strategic partner 51% (initially, to be agreed upon after
attracting the strategic partner).
 The remaining portion (23%) to be distributed to other
parties.
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The formulation of a technical committee
 In September 2011, The steering committee held a meeting
and decided to formulate a technical committee comprises
representatives from ABJ, Banks, IFC, communication and
IT sector, microfinance sector.
 In October 2011, the technical committee held a number of
meetings and submitted its recommendations to the steering
committee.
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The steering committee fifth meeting
 Accordingly, the steering committee suggested the following:
1. Sending an official letter to the interested parties and data
providers to confirm their participation in the company, and
their willingness to provide the credit information regarding
their customers to the company.
2. Appointing a legal consultant a legal consultant.
3. signing an MOU between ABJ and IFC.
4. Sending a “ request for expression of interest” to a number
of international companies.
5. Consulting a legal company regarding the legitimacy of
Data Offshoring (Hub & Spoke Approach) in establishing the
credit Bureau company.
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Thank You
For Your Attendance
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