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Oliver Kazunga Acting Business Editor
GOVERNMENT and the Reserve Bank are working on finalising a legal framework for a credit reference bureau to consolidate credit risk management in banks and minimise over-indebtedness by borrowing members of the public. Reserve Bank of Zimbabwe (RBZ) acting Governor Dr Charity Dhliwayo said crafting of a legal framework was in view of a deterioration in asset quality.
“Credit reference bureaux play a critical role in the management of credit risk by banking institutions and help minimise over indebtedness by borrowing members of the public.
“In this respect, the Reserve Bank has drafted a credit reference bureau accreditation framework, which outlines minimum requirements,” she said while presenting the 2014 monetary policy statement recently.
The central bank and Government through the Ministry of Finance and Economic Development are in the process of finalising the legal framework.
Dr Dhliwayo reiterated the need for banks to continue strengthening their risk management systems which has been an underlying problem at most banking institutions reporting high levels of non-performing loans.
“Within this context, stress-testing should form an integral part of banks’ risk management tools as it provides an early warning signal to bank management to adverse unexpected outcomes related to a variety of risks.”
As at December 31, 2013 total banking sector deposits amounted to $4.73 billion while loans and advances were $3.70 billion.
“Stress testing results should be factored into key strategic decisions; we expect bank boards to ensure that stress-testing results are part of their information packs.
“In addition, stress-testing frameworks should also be enhanced to include other variables such as liquidity and interest rates,” she said.
Meanwhile, Dr Dhliwayo expressed concern over the commercial and banking related cases that were taking too long to be settled through the court system.
She said in order to expedite the settling of such disputes, there was need to establish a commercial court dedicated to adjudicating commercial and banking related cases.
“The Reserve Bank will with immediate effect engage the relevant authorities and stakeholders to address this issue,” she said.
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