opened up gradually and in a focused manner ; a penal mechanism should be gradually established ; credit registry institutions should be regulated and market supervision should be enhanced. vice premier huang ju has also given important remarks on building corporate and personal credit registry. in order to strengthen market regulation and promote the establishment of a social credit system, the state council entrusted the people ’ s bank of china with the responsibility of promoting the institutional and system arrangements of a social registry system, regulate and promote the sound development of the loan registry industry, and approved the establishment of credit information system bureau to undertake the specific works. the pbc has been working to build a credit registry system since then. 2. facts about the building of a corporate and personal credit information database the database, as part of the infrastructure of a credit registry system, is to establish a set of credit information file for companies and individuals. at the beginning, loan, credit transactions and settlement account establishment information of companies and individuals are collected from commercial banks to provide inquiry services for commercial banks to make lending decisions ; gradually information will be collected from other sources to provide services to the whole society within the limit permitted by laws and regulations. 1 ) formerly, the corporate credit information database was known as bank credit registration and inquiry system, which was established in 1997 and started to operate in early 2002. this system has a three - level database, i. e. at city, provincial and national levels. enterprises ’ basis information, their borrowing from financial institutions and guarantees with financial institutions as well as major financial indicators of enterprises were collected by the system for major commercial banks in the country to inquire online. at end november 2005, the system contained information of 4. 52 million enterprises with rmb loan outstanding of 17. 36 trillion yuan, accounting for 90 percent of the total loan with financial institutions in the country. when the system was developed in 1997, it connected the city databases across the country to enable cross - region inquiry due to the fact that commercial banks did not have centralized databases. in 2005, the pbc started to build a nationwide corporate credit information database. there is a centralized database and each commercial bank has only one interface with the centralized database through its headquarters. more than 800 categories of data were collected, instead of the some 300 hundred previously. on 15 december 2005, the corporate credit information database was connected with all major commercial banks and started its trial operation. it provided real time inquiry service in shanghai, tianjin, zhejiang and fujian. we expect that in the

student loan has a high npl ratio because banks could not find some of the borrowing students after their graduation. according to a survey covering a certain province done by a pbc branch, at end october 2005, there were 15, 075 graduates who were yet to pay off student loans, among which 4, 282 people failed to pay interests and principal according to their borrowing agreements, resulting in a default rate of 28. 4 percent. after the establishment of the individual credit information database, the basic information of a borrowing student as well as each loan - related transaction will be kept in the database and form a credit history. the credit history will have an impact on this student ’ s future activity and helps to encourage prompt payment. at the same time, when a borrowing student opens a settlement account with a commercial bank, this information shall be collected by the credit information database and helps the lending bank to locate this borrower, and provides an institutional arrangement for the lending banks to recover any loan arrears. the individual credit information database will help improve university students ’ credit record and facilitate the implementation of student loan policy. for companies and individuals, having a good credit history will not only make it easier to get bank loans, but also helps them get loans on favorable terms. the credit history of borrowers that the credit information database keeps helps commercial banks to price loans on the basis of risks. borrowers with a good credit history are more likely to receive low lending rates ; those with a bad credit history are difficult to get loans and are more likely to receive high lending rates. 4. individual credit information database aims at protecting privacy while enabling information sharing among commercial banks the credit information database will also ensure information security and protect privacy while enabling information sharing and helping prevent credit risks. the people ’ s bank of china has strengthened legislation building during the establishment of the database. in order to ensure all use of individual information is legal and protect the legitimate rights and interests of individuals, the people ’ s bank of china has issued provisional rules on the management of individual credit information database, rules on management of financial institution users of individual credit information database, rules on handling disputes in the use of individual credit information database on the basis of extensive consultation, adopted measures such as authorized inquiry, restricted use, security, inquiry recording and penalty in case of violation, in order to protect information security and privacy. only with the authorization of the individual concerned, commercial banks can inquire the database for information when assessing loan applications, credit