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Zimbabwe sets up credit bureau as banks reel from defaults

By Nqobile Bhebhe
Posted on Wednesday, 17 August 2016 09:48

The Reserve Bank of Zimbabwe governor John Mangudya said the bureau would go live by the end of this month.

“By end of this month (August) we will be going live. We are happy with the system services that have been installed and this is going to minimise credit risk,” he said.

A credit bureau is an institution or agency that collects information from creditors and available public sources on a borrower’s credit history.

The bureau or registry will compile information on individuals and corporates such as data on credit repayment records, court judgments, and bankruptcies before creating comprehensive credit reports that are availed to lenders or creditors.

The absence of a credit registry in Zimbabwe had resulted in multiple borrowers at a number of banking institutions, thereby increasing chances of defaults.

Experts say the bureau should enhance the verification process for borrowers, enabling bankers to assess credit risk and reduce the level of non-performing loans in the banking sector.

A non-performing loan is the sum of borrowed money upon which the debtor has not scheduled payments for at least 90 days.

Creditinfo, a Czech Republic credit checker was in April 2016 awarded the tender to set up the RBZ’s credit bureau system at a cost of $1, 8 million.

Zimbabwean banks are said to be reeling from non-performing loans and are fast-tracking legal processes to recover bad loans that reached a peak of 20, 45 percent last year.

The banking sector currently uses the Financial Clearing Bureau (FCB), which players in the sector say only keeps a register of defaulters and judgments.

Rising defaults have seen banks resorting to the courts to recover their money.

With the CRB system coming on board, the RBZ will also establish an internal unit that will licence and monitor private credit bureaus.

Meanwhile, CBZ Holdings, Zimbabwe’s biggest lender with over $1 billion in deposits registered a 3,8 percent increase in bad loans due to the poor performance of the country’s agriculture sector.

Non-performing loans climbed to $78, 9 million during the half-year from $76, 1 million at full-year 2015, the group said in its latest earnings release.

The bank blamed the increase in non-performing loans on below par performance in agriculture.

The number of customers in agriculture that failed to repay loans rose by more than 93 percent during the last six months.

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