Credit Reference Bureau a welcome move

HARARE - In Zimbabwe there are many people who are running away from their lives because of yesterday’s deeds.

Some of the deeds might have been a result of miscalculated investments that backfired or heavy debts incurred while funding non performing entities.

At worst, the debts were incurred as a result of funding lavish lifestyles. Zimbabwe at present is grappling with Non Performing Loans (NPLs) which are choking the economy.

Officials say the NPLs have ballooned to more than $700 million. Part of the problem is that there has not been an effective credit rating system to help financial institutions screen loan applicants.

It is encouraging that the Reserve Bank of Zimbabwe (RBZ) is pushing to have a Credit Reference Bureau (CRB) which could solve some of the issues contributing to NPLs.

CRB measures are contained in the Monetary Policy Statement (MPS) unveiled last week by RBZ governor John Mangudya.

Pursuant to creating the credit reference system, the Banking Amendment Bill shall be gazetted to provide for the issuance of regulations governing the licensing and supervision of credit reference bureaus and establishment of a credit information data bank.

The Banking Regulations will also spell out statutory obligations of credit reference bureaus and the rights of borrowers.

Indeed we agree that there are limited avenues for banking institutions and other credit providers to check and/or share information on the credit history of borrowers.

Most financial institutions that are battling defaulting clients have no intelligence on them. Some of them as observed by the RBZ are multi-banked clients who are serial defaulters with non-performing loans at several banking institutions.

Among the features of the proposed credit reference system are a credit registry which will be based in the Reserve Bank and will collect credit information from all banking institutions and microfinance institutions.

The credit registry will serve as a databank for licensed private CRBs.

The private CRBs will access the credit information from the credit registry and provide reports to their subscribers.

We fully support the efforts by the monetary authorities to try and change the way things have been going in the financial services sector.

Without a proper monitoring mechanism, our financial institutions remain susceptible to serious risk.

Banking in particular, is about trust and confidence.

If there is no confidence and trust, investors look elsewhere.

Capital is timid and there is no second guessing when it comes to investing it!

 

Comments (1)

yah sure thats a great move because the last thing our economy wants is people borrowing funds supposed to start businesses and then import posh cars further causing leakages.

Anesu Callen Gaza - 15 February 2015

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