PMA Launches Upgraded Version of the Credit Scoring System
The PMA has launched the upgraded Version IV of the Credit Scoring System. The system is now available to users from the banks, lending institutions and some leasing companies. The operation of this upgraded version is based on separate scorecards for individuals, on one hand, and for corporations and institutions, on the other. It thereby takes into consideration the differences in nature and terms that distinguish facilities offered to individuals from facilities offered to companies. Variables have been developed to suit PMA policy that aims at promoting productive loans at the expense of consumer loans and encouraging borrowers rectify their credit situations, while compliant to requirements of the system’s mechanism of action which relies on the assessment of the borrower’s credit behavior.
The launch of this upgraded version of the system was coupled with update of the Instructions on Housing and Real Estate Mortgage Lending Based on the Dynamic Loan to Value (LTV) Ratio. The instructions were updated so that they are in agreement with amendments resulting from upgrading of the credit registry system, in both its versions: III and IV, and from updating of the credit scoring system and the subsequent changes to risk ranking. The updated instructions emphasize their basic principle that links extending housing and mortgage loans with borrower credit scores.
It is worth mentioning that the PMA’s Credit Scoring System, unrivaled at the level of central banks in the Middle East, has paved the way for the PMA to implement, both judiciously and in line with relevant international best standards and practices, a supervisory policy for credit portfolio risk management -including housing loans portfolio.
The launch of version IV of the credit scoring system follows the launch earlier in April of this year of the upgraded version of the Credit Registry System. Furthermore, the PMA is currently looking into other credit systems to be launched before end of 2016.
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