Credit bureau loads up on bank loans

Credit bureau loads up on bank loans

HARARE, May 29 (The Source) – The Zimbabwe central bank’s credit reference bureau, which started operating in January, now has 85 percent of information on total loans extended by the banking sector.

Credit bureaus are seen as a solution to tackling the high level of non-performing (NPLs) loans in the fragile domestic banking sector, currently at around 16 percent.

Bad loans reached $700 million, or 20.45 percent of total advances, before the central bank set up the Zimbabwe Asset Management Company (Zamco) three years ago to buy them off banks.

The Office of the President and Cabinet (OPC), which is leading business reforms, said the banking sector had a total of 371,485 loans given to 361,525 individuals and 9,960 corporations.

“The OPC as the coordinator of the Ease of Doing Business measures is happy to report that the Reserve Bank of Zimbabwe successfully deployed the Credit Registry system in November and December 2016 and the system became operational in January 2017,” the OPC said in a statement.

“All the nineteen banking institutions are subscribers to the credit registry system, meaning that banking institutions are required to check with the registry before granting loans, in order to get information on the credit history of the applicant before granting loans.”

The registry is also registering the top 20 micro-finance institutions as subscribers to the system. The micro-financiers represent 84 percent of the assets of the microfinance sector and will have full access to the registry with effect from the May 30.

“There are also plans to co-opt the rest of the micro-finance institutions, numbering approximately 160, after their personnel have undergone training,” the OPC said.

Studies have shown that comprehensive data on consumer credit histories significantly reduces the costs to new lenders entering loan markets, and may eventually enable the banking and micro-finance sector to tap into global capital markets to obtain funds for lending, it added.