Credit reference bureau in pipeline

Credit reference bureau in pipeline

The BoT Governor Prof Benno Ndulu said currently the preliminary testing of the systems has gone smoothly and the data base for banks’ customers is ready for use. “The credit bureau will start operating this month as planned,” Prof Ndulu told reporters after he launched the online system for trading government securities over the weekend.

He, however, said the second version of private credit bureau would be delayed due to the fact that operators need to be licensed before commercialisation of the bureaus. “At least one or two such credits are expected to be established before this year’s end,” the Governor said.

The private credit bureaus will compile credit histories of customers from utility firms such as water and electricity supplies, phone companies to show one’s credibility when it comes to management of debts. Under the design scheme, private credit bureaus would have access to the BoT managed CRB as well as other credit sources which are not regulated by BoT.

Commercial banks would be getting information from the private credit reference bureaux, as well. Having credit information system in place has many advantages to the financial sector, including improvement in the private sector performance. The would-be lenders may use their positive credit history as collateral to access loans at better rates and seek more competitive terms from different lending institutions.

“The credit information sharing system is expected to promote increased level of trust between lenders and borrowers, resulting in increased volume of credit in the economy,” Prof Ndulu hinted. Among other things, the central bank chief said, the CRB would also increase transparency and competition among the lenders.

Early this year, BoT conducted a workshop, under the consultancy of Czech Republic-based firm, CreditInfo International. The aim was to brief CEOs of financial institutions on the progress and what should be expected. BoT is mandated by the Bank of Tanzania Act 2006 to establish the databank as well as licence and regulate private credit reference bureaux. In the past Tanzania Bankers’ Association (TBA) introduced and hosted their own version of CRB, but some banks were reluctant to share information with others.

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