CBL launches credit bureau
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.