Oliver Kazunga Senior Business Reporter
THE Reserve Bank of Zimbabwe has engaged a private company to set up a Credit Reference Bureau (CRB) at a cost of about $1.8 million.
The new entity is set to play a critical role in consolidating credit risk management in the banking sector and minimise indebtedness by borrowing members of the public.
The apex bank governor, John Mangudya, announced last week that significant progress had been made towards the establishment of the CRB.
“The adjudication process, which was in line with public procurement rules and regulations, has been completed and the contract for setting up the CRB system was awarded to a renowned company at a cost of around $1.8 million,” said Mangudya in his 2016 monetary policy statement.
“The credit reference databank will be housed at the bank (RBZ). All banking institutions and microfinance institutions will be mandated to provide credit information both positive and negative, to the databank,” he added.
Mangudya said in terms of the model adopted by the central bank, all private credit bureaus would be able to access at a fee, information from the databank.
It is hoped that any activity involving the collection and dissemination of credit information will be done confidentially taking into consideration the minimum requirements set by the monetary authority.
“In this regard, the bank (RBZ) shall accredit private credit reference bureaus to enable them to also collect and/or obtain credit information from the financial institutions,” said Mangudya.
Of late, the Reserve Bank has reiterated the need for banks to strengthen their risk management systems, which has been an underlying problem at most banking institutions reporting high levels of Non-Performing Loans (NPLs).
Mangudya said the ratio of NPLs to total loans declined markedly from a peak of 20.45 percent as at September 30, 2014 to 10.87 percent at December 31, 2015.
He said improvements in the level of NPLs in the banking sector was largely attributable to the disposal of qualifying loans to Zimbabwe Asset Management Company (Zamco) and the effective credit risk management strategies employed by banks including intensified collections and workout plans.
“The institution of various resolution policy measures by banks, the assumption of qualifying NPLs by Zamco and the establishment of a credit reference bureau are expected to further reduce the level of NPLs.
“Towards this end, banking institutions are working towards reducing their NPL ratios to levels below 10 percent and 5 percent by June 30, 2016 and December 31, 2016 respectively,” he said.
Zamco was established in 2014 as a special purpose vehicle with a mandate of cleansing banks’ balance sheet through acquisition and restructuring of NPLs.
As at December 31, 2015 Zamco had acquired and restructured NPLs amounting to $357 million from a number of distressed companies and banking institutions with good turn around prospects.