Proposed amendments to the regulation of Brazilian credit bureaus are credit positive for banks because they would anchor loan origination and risk pricing through increased visibility of customers' histories, Moody's said March 18.
The amendments, which garnered approval from Brazil's senate March 13, would allow credit bureaus to automatically collect consumer and corporate credit histories, as opposed to the rule that requires credit bureaus to obtain borrowers' approval for the collection of their payment information. The proposal indicates that credit bureaus will get the information from banks, utilities and telecommunications service providers.
The proposed amendments would "foster borrower discipline and help improve risk pricing, particularly for clients with good credit histories," Moody's wrote. "More information on payment behavior will help reduce credit costs for banks, which remain as high as 3.5% of total loans for the industry, well above costs for other banking systems in the region and global standards."
Credit penetration, which is below 48% of Brazil's GDP, could also rise as credit bureaus access a broad database of borrowers' histories.
The amendments are still subject to presidential approval.