BoT: Credit reference bureau kicks off in Sept

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Spining

Bank of Tanzania

The long awaited Credit Reference databank at the Bank of Tanzania (BoT) is expected to start operating in September this year in an effort to facilitate easy access to borrowers’ information by bankers.

This was revealed by the BoT’s Deputy Governor (Financial Stability and Deepening) Lila Mkila in Dar es Salaam this week when opening a one-day workshop on the establishment of the credit reference bureau.

“Already hardware and preliminary software have already been supplied and installed…pilot testing is expected to begin in June this year and the databank will kick off this September,” he said.

Having credit information system in place has many advantages to the financial sector, he added. They include improvement in the performance of the sector and stimulating economic development by addressing the impediments that contribute to the increasing number of non-performing loans, he added.

Also, borrowers may use their positive credit history as collateral to access loans at better rates and seek more competitive terms from different lending institutions, he said.

“By addressing the problem of information asymmetries, the credit information sharing system is expected to promote increasing level of trust between lenders and borrowers, resulting in increased volume of credit in the economy,” Mkila said.

This trust, the deputy governor said, would also increase transparency and competition among the lenders, he said.

The BoT deputy governor also told chief executive officers and senior officials of commercial banks, financial institutions and other stakeholders that BoT has already invited interested operators to apply for credit reference bureau licenses.

“Some credit reference bureau operators, including renowned international credit bureaux, have shown interest and we expect to receive applications from them in the very near future,” he said.

Private credit reference bureaux would have access to the BoT managed Credit Reference Databank as well as other credit sources which are not regulated by BoT, he said. Commercial banks would be getting information from the private credit reference bureaus.

During the workshop, consultants from Czech Republic-based firm, CreditInfo International, Radek Bittner, Filip Kratochnil and Martin Koubik, briefed stakeholders on the progress of the credit reference databank as well as what is expected from the banks when it kicks off in September.

Workshop participants wanted to know how the databank will come into operation in the absence of unique identification (national identity cards) in Tanzania.

They also wanted to know whether BoT was hosting the credit reference databank temporarily or permanently, as they charged that in other countries the function is done by private firms.

Responding, Bittner said, for borrowers to have unique identification was only an added advantage, but the databank could be in place even without it.

He gave the example of a related project in Sudan where the databank has taken off despite there being no unique identification.

As regards hosting the databank at BoT, the Director of Banking Supervision, Agapiti Kobello, said the central bank is mandated by the Bank of Tanzania Act 2006 to establish the databank as well as licence and regulate private credit reference bureaux.

He added that BoT had in the past allowed Tanzania Bankers’ Association (TBA) to host the credit reference databank, but some banks were reluctant to share information through it.

“That is why it will be housed at the BoT. In future BoT will be happy to let a private operator run the databank,” he added.

Source The Guardian

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