The credit information network company SciNet has got the approval from the Central Bank of Kuwait that allows local telecommunications companies to categorize their customers, which predicts their ability to pay.
The current open discussion with the Communications and Information Technology Regulatory Authority (CITRA) about some technical and formal details related to the data that will be included in the report, which telecommunications companies must provide the network with.
The source explained that the telecommunications companies had previously asked SciNet officials to include their customers’ database on its network, within the field available to banks, which determines the quality of the customer, his history, the size of his loans, the extent of his regularity in paying installments, and all the credit information that helps them determine the risks of dealing with the new client.
However, this view encountered legal and supervisory resistance, on the grounds that making credit information available to telecom companies violates banking secrecy, and that the sector is not subject to the supervision of the Central Bank, and therefore the deduction of premiums set at 40% of the salary for employees and 30% for retirees does not apply to it.
The sources pointed out that the most likely scenario for implementation is that the telecommunications companies are listed on SciNet to later identify the customer’s personal data according to credit cards, and the history of his payments in communications before contracting with him, so that the SciNet report is supposed to show whether the customer is the applicant for a new subscription failed to pay his bills previously or not.
According to this trend, the information available to telecom companies, in the event of moving forward with the decision, will not include the historical credit history of customers or the size of their indebtedness, with a banking classification according to the degree that determines the extent of the commitment of each category of customers, which includes a high, medium and low rating.
According to this scenario, banks will likely not benefit from telecom companies’ customer data, as each sector will have its own exclusive data.
The inclusion of telecom companies’ customers on SciNet is of additional importance for more than one reason. On the one hand, this represents additional protection buffers for telecom companies in light of the competitive behavior they have resorted to in the recent period, which included costly offers to motivate customers to engage with them contractually for medium-term periods of up to two years. This requires more knowledge of the new customer’s ability to comply with his contractual terms in the future, especially if his bill is based on a monthly deduction.
Also, after the Kuwaiti legislator abolished Law No. 71 of 2020, regarding the issuance of the bankruptcy law, imprisoning the businessman and getting an arrest warrant and bring him in, it is an additional incentive to accelerate the inclusion of the telecom customer database on “SciNet”, so that this step contributes to narrowing the opportunities for risks associated with the customer’s payment. its obligations to telecom companies in the future.
The sources emphasized that it is not obligatory for any of the three telecommunications companies to take the customer rating report that they can obtain from SciNet in the future, as the decision to deal with the customer or not will be in accordance with the risk management approach of each company, meaning that the decision to accept customers, whether rating holders the higher (A) or (C) is due to each company’s acceptance of the risk curve, which suits it in the customer’s payment of its obligations in the future.
The open discussions in this regard did not specify the appropriate time period for the failure of the telecom client, upon which it can be included in the blacklist, and the value according to which it should be classified.
The sources pointed out that this proposal is part of a broader work plan that is being studied by SciNet for the next three years, which includes a set of developmental measures that are considered an important step for the company to enhance its credit standing, and commensurate with the limitations of its work, including the law regulating the exchange of credit information, which is in line with the global system used in most credit reporting companies, by displaying the credit status report to clients who obtain credit facilities from credit granting institutions.
SciNet activated at the end of last year the operations of listing commercial credit data and information for borrowing companies on its network, and since that date the Central Bank of Kuwait has not provided banks with any credit information regarding companies like the previous one.
The law stipulated the establishment of a company established to carry out the business of requesting, collecting, preserving, analyzing, categorizing, using and circulating credit information, preparing the credit history and credit rating of clients, issuing a credit information report and credit rating to clients, and preparing and developing risk tools and standards and what is related to them.