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Business Reporter
The Reserve Bank of Zimbabwe hopes to reduce the non-performing loans ratio in the banking sector to 5 percent from the prevailing 14 percent once implementation of the Credit Reference Bureau, has commenced, RBZ bank supervision director, Norman Mataruka has said.

Speaking at a Credit Reference System stakeholders’ conference on Wednesday, Mr Mataruka said the CRB will also bring down the average interest rates in the banking sector.

“We want to deal with the high levels of non-performing loans in the banking sector and bring it down to acceptable levels of 5 percent from the current 14 percent. The CRB will also deal with the lax credit culture, which is currently rampant in the country.

“We want to reduce challenges of credit information asymmetry and potentially bring down average interest rates. The central credit registry will contribute to more robust credit risk management practices which will help promote the safety and soundness of the financial system,” he said.

Mr Mataruka said the Reserve Bank will implement a hybrid credit reference system, with provision for both private credit bureaus and a credit registry, which will be fully owned and operated by the Reserve Bank. He said the bank is currently selecting the vendors that will roll out the CRB program.

“The model the Reserve Bank is implementing is not intended to result in the extinction of private CRBs as they will continue to have an important role to play within the economy. Private CRBs accredited by the Reserve Bank would be able access information requested at a nominal fee,” he said.

Speaking at the same occasion, Deputy RBZ governor Dr Charity Dhliwayo said in addition to the establishment of a Credit Registry Department, RBZ is also in the process of co-ordinating data providers as well as the private credit bureaus to work on the development of standard data templates to enable all data providers to submit data in standardised format.

“The Reserve Bank has also reached a stage where is contacting and assessing the suppliers of information systems that are going to be used by the credit registry with a view to acquire the software,” she added.

Dr Dhliwayo said the requisite amendments to the Banking Act have since been approved by Cabinet to provide for adequate legislation to cover operations of the credit registry and appropriate regulations for the licensing and operation of private credit reference bureaus.

The Ministry of Finance and Economic Development is at advanced stages working on the legal framework for establishing a credit reference bureau system in the country.

She said the absence of a comprehensive credit reference environment in Zimbabwe has been a major bottleneck to the expansion of the volume of private sector credit.

“A credit reference system is expected to improve the performance of the financial sector and stimulate economic development by making lending and borrowing easier, faster, and ultimately cheaper. Further, borrowers can use their positive credit history as “collateral” to access loans at better rates and seek more competitive terms from different lending institutions. A credit reference system promotes and supports a high level of trust between lenders and borrowers – resulting in an increased volume of credit in the economy. In addition, timely and accurate information on borrowers’ debt profiles and repayment history enables banks to make more informed lending decisions,” she said.