CBL launches credit bureau

Lesotho Times - - Business - Retha­bile Pitso

THE Cen­tral Bank of Le­sotho (CBL) on Tues­day launched a Credit In­for­ma­tion Bureau (CIB) to en­able lenders to know how bor­row­ers re­pay their loans so they can make in­formed credit de­ci­sions and take ap­pro­pri­ate risks.

The CIB was the re­sult of col­lab­o­ra­tion be­tween the CBL, Min­istry of Trade and In­dus­try, the World Bank-funded Pri­vate Sec­tor Com­pet­i­tive­ness and Eco­nomic Di­ver­si­fi­ca­tion Pro­ject II, the Mil­len­nium Chal­lenge Cor­po­ra­tion through the Mil­len­nium Chal­lenge Ac­count Le­sotho and the Fi­nance Min­istry.

Un­der the CIB, Com­pus­can Le­sotho Pty Ltd up­loads data from all credit providers and other re­lated in­sti­tu­tions, which in­clude com­mer­cial banks, telecom­mu­ni­ca­tions com­pa­nies, re­tail­ers, sav­ings and credit co­op­er­a­tives, money lenders and mi­cro­fi­nance in­sti­tu­tions, in­sur­ance com­pa­nies, util­ity com­pa­nies, and the Min­istry of Home Affairs.

Prior to CIB’S launch, Com­pus­can had been the only credit bureau li­censed by the CBL where lenders were sub­mit­ting their credit data.

In his ad­dress dur­ing the launch cer­e­mony, CBL Deputy Gov­er­nor Dr Masilo Makhetha said the CIS was part of a raft of mea­sures the coun­try was im­ple­ment­ing to ad­dress ma­jor bot­tle­necks in the fi­nan­cial sec­tor.

“In the case of Le­sotho, the CIB col­lects, ver­i­fies, and stores both pos­i­tive and neg­a­tive credit his­tory of bor­row­ers; and shares the in­for­ma­tion with credit providers,” Dr Makhetha said.

“Con­se­quently, credit providers take into con­sid­er­a­tion such pos­i­tive or neg­a­tive in­for­ma­tion from the CIB when mak­ing lend­ing re­lated de­ci­sions.”

He said the CIB was an in­de­pen­dent third party, and would not make loans or credit de­ci­sions.

“From this def­i­ni­tion there­fore, the CIB is not an in­sti­tu­tion where bor­row­ers are (black) listed as it is gen­er­ally pur­ported, but rather pro­vides in­for­ma­tion for credit providers to make in­formed credit de­ci­sions and to take ap­pro­pri­ate risks,” said Dr Makhetha.

“With bet­ter in­for­ma­tion on bor­row­ers, lenders, on the one hand, can ac­cu­rately mea­sure the credit risk and, there­fore, price their loans ac­cord­ingly. On the other hand, bor­row­ers with ex­cel­lent credit his­tory can de­mand bet­ter in­ter­est rates, lead­ing to in­creased de­mand for loans.”

With more com­pre­hen­sive in­for­ma­tion on bor­row­ers, he said, lenders are also more con­fi­dent in mak­ing credit de­ci­sions and can in­crease lend­ing.

“Con­sumers or data sub­jects have the right to pri­vacy of data in ac­cor­dance with the law, and they re­serve their rights: l To ob­tain credit re­ports, once a year for free; and ad­di­tional re­ports for a fee, in or­der to learn what is con­tained in their files; l To dis­pute in­ac­cu­rate credit in­for­ma­tion; l To re­ceive an ex­pla­na­tion of each item in the credit re­port; l To re­quest that their credit in­for­ma­tion be sup­ple­mented, and in­cor­rect in­for­ma­tion to be cor­rected or deleted: and l To be as­sured that ac­cess to their file is lim­ited to those with the need to know,” the deputy gov­er­nor noted.

Dr Makhetha said their next port of call would be to put in place ap­pro­pri­ate su­per­vi­sory tools and frame­works as well as in­tro­duc­ing stan­dard­ized re­port­ing and data­base for­mats.

“This phase of the pro­ject is cur­rently on­go­ing and is be­ing fi­nanced by the Pri­vate Sec­tor Com­pet­i­tive­ness and Eco­nomic Di­ver­si­fi­ca­tion Pro­ject,” he said, adding that they would also un­der­take aware­ness cam­paigns for con­sumers and train­ing for all stake­hold­ers.

“The last step will in­volve up­load­ing of data for busi­nesses or ju­ris­tic per­sons.”

CBL Deputy Govenor Dr Masilo Makhetha.

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