The Central Bank of Iran has cancelled its decision announced last week to impose restrictions on third-party credit rating platforms, allowing them to resume services as the representative of the Iran Credit Scoring Institution (ICSI).
According to Way2pay website, CBI's decision was criticized by experts and market observers including the head of the Tehran ICT Guild Organization, who censured the move as “hasty”.
The CBI revoked the ban on Wednesday in line with its policy to support credit rating platforms. Vahid Abbaszadeh, the ICSI chief confirmed to Way2pay that its services are again available to the public.
ICSI was created to function as Iran's credit bureau. A credit bureau is an agency that collects and researches individual credit information and sells it to creditors for a fee.
Market analysts have often expressed concern about ICSI's monopoly in the market as it is the only institution authorized to offer credit assessment services in the country.
However, the company says it has signed contracts with third-party websites that were allowed to sell rating services as its representatives.
The central bank last week required ICSI to cut representatives' access to its system and restrict its services only to banks and authorized credit institutions. The ban was reportedly aimed at addressing the regulator's concerns about transparency of representatives' activities and curb fraud
The central bank last week required ICSI to cut representatives' access to its system and restrict its services only to banks and authorized credit institutions. The ban was reportedly aimed at addressing the regulator's concerns about transparency of representatives' activities and curb fraud.
The company on Saturday said the measure does not mean that individuals cannot make use of its services. ICSI services, it said, would henceforth be accessible directly from the company instead of its representatives.
It stressed that all companies can use the services after signing contracts directly with the ICSI.
Last year, the CBI published rules for the establishment of credit rating firms. Companies are required to analyze the financial records of clients and provide them reports on the credibility of individuals and corporates by assigning scores on a scale of "very poor", "poor", "average", "good" or "very good", in accord with CBI requirements.
Ratings are determined after assessing the financial performance of the customer within a fixed period plus solvency, ability and willingness to pay. Scores indicate credibility and discipline in meeting debt obligations.
For example, customer deferral in paying small debts, such as utility bills, is considered as unwillingness or inability to pay. However, if the default is due to bankruptcy or force majeure, it suggests insolvency.
Creditworthiness is also determined via other parameters, namely delays or punctuality regarding maturities, financial wrongdoing, unpaid checks and tax commitments.
Rating agencies should collect data from providers and update their database as soon as they receive new data.
According to the ICSI website, the company currently has nine representatives. It is providing services to 31 banks and six credit institutions and leasing companies.
