MORE than 97 percent of loans in the banking sector have been registered with the Reserve Bank of Zimbabwe (RBZ)’s credit registry, which went live in May, helping create a database that will enable subscribers to prudently extend credit.
This represents 361 154 of the 371 485 bank loans currently on the market. They cover 361 525 individuals and 10 150 companies.
A traceable track record of financial transactions is regarded as key in containing non-performing loans (NPLs) and also helping potential borrowers access loans.
Currently, 19 banks are subscribers to the credit registry. Microfinance institutions have also subscribed as well. There seems to be a growing appetite for the service as the central bank reported last week that enquiries have continued to increase since the credit registry began in May.
The second phase of implementing the service, which involves co-opting microfinance institutions (MFIs) and other credit providers, has since begun. Notably, training of MFIs as data providers has been ongoing since June.
Work is also underway to provide continued access to consumer reports by individuals and corporate borrowers. “In the long run an improvement in the credit reporting environment is expected to improve the general credit culture across all economic sectors, and thereby substituting the scope of ZAMCO in mitigating NPLs and enhancing financial sector stability,” said RBZ Governor Dr John Mangudya during the presentation of the Mid-Term Monetary Policy Statement on August 2.
It is believed that in creating the credit registry, the RBZ consulted key stakeholders to ensure it was “fit for purpose” and able to address the concerns of key stakeholders in the microfinance sector.
Separately, since the passage of the Movable Property Security Interests Bill during the first half of 2017, preparations are now underway for the establishment of a collateral registry that will set the framework for movable properties that can be used to access loans.
But this will be preceded by outreach programmes by the RBZ, banks and MFIs. The regulator, however, is driving banks to “prime their systems and re-orient credit practices in order to take full advantage of the collateral registry system, which is anticipated to promote financial inclusion”.
The credit registry is considered to be part of the ease of doing business reforms to improve Zimbabwe’s attractiveness to foreign and domestic investment, reduce cost of doing business, improve performance of public utilities in delivering quality service to the people as well as creating value for money in providing services.
The reforms target 10 key global indices for ease of doing business and these are starting a business, getting credit, protecting minority investors, resolving insolvency, paying taxes, enforcing contracts, trading across borders, construction permits, registering property and getting electricity.
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