‘Support private sector initiatives to set up CRB’

Calls for the establishment of a CRB come in the wake of increased availability of credit facilities in the country since adoption of the multiple currency system in 2009.

But low economic activity, low disposable incomes and constrained industrial capacity utilisation have affected both corporate and individuals’ capacity to repay loans.

High utility rates and service charges against low household incomes have also contributed to constrain repayment capacity by debtors.

Deposit Protection Corporation (DPC) corporate secretary Mr Vusi Vuma said setting up the CRB was imperative in the wake of an increase in the number of non-performing loans.

“Treasury should support initiatives by the private sector to set up a CRB in order to reduce the high incidence of multiple borrowers and non-performing loans,” he said.

Mr Vuma said the level of non performing loans in the banking sector had increased from seven percent in December 2011 to 12,3 percent by June this year.

“This is a reflection that asset quality is deteriorating and has now breached the five percent prudential guideline for non-performing loans.”

The main thrust of a CRB is to build a data bank of credit worth individuals and firms in the country.

The bureau would provide lending institutions with important information on individuals and firms to facilitate access to credit while speeding up credit applications and approval processes.

While mostly banks use the credit risk data, it would also benefit other lending firms to have access to credit information in order to make informed risk management decisions. — New Ziana.