Tough times for loan defaulters

ZIMBABWE’S serial defaulters are in for a bumpy year following operationalisation of the country’s credit registry.

The registry, which by end of January this year already had a total of 104 000 loans uploaded into its system, is expected to enhance credit culture among borrowers in various sectors of the economy.

Central bank governor John Mangudya said the system went live last month with the aim of capturing all 414 262 loans in the banking sector by the end of March.

“In line with the phased implementation approach which the Reserve Bank of Zimbabwe (RBZ) adopted, banking institutions are already providing their loan records to the registry and updating the records regularly with payment patterns of clients when repayments are effected,” he said in his 2017 monetary policy statement.

As the fish rots from the head, ordinary Zimbabweans are not the country’s only bad debtors with the State harbouring an international debt over-hang of over $7 billion.

Finance minister Patrick Chinamasa recently said Zimbabweans lacked financial discipline with the culture of saving and repaying loans dead in the country.

“The culture of saving just is not there in this country. Government has had to create a special purpose vehicle to house bad loans and help banks clean their balance sheets because they were drowning in Non-Performing Loans (NPLs).

“What the country needs is schooling in financial discipline, and a credit registry is a good way to start and monitor bad debtors,” he said.

However, most defaulters fail to honour their debts as a direct result of economic collapse, which has led to company closures and unemployment.

With the credit registry now in operation, credit providers will be able to undertake background checks with the registry and private credit bureaus when considering loan applications.

After the vetting, chronic bad debtors will be black-listed from credit access.

“The credit registry will significantly add value to banks’ and microfinance institutions’ credit risk management and governance systems as well as bring down the level of non-performing loans across the sector going forward.

“The credit registry is also a readily accessible repository for credit data which is expected to facilitate a reduction in lending rates as financial institutions can easily access and assess information and price their risks accordingly,” the central banker said.

Last month, the RBZ began the process of registering various credit providers such as banking institutions, microfinance institutions (MFIs), deposit-taking MFIs and credit shops as subscribers in the credit registry system to enable them to access the credit registry database.

During the first quarter ending March 31, 2017, RBZ will commence the second phase of the credit registry system implementation which entails incorporation of other data providers such as deposit-taking microfinance institutions, microfinances, credit granting departmental stores and utility bodies.

“This will effectively broaden the scope of credit data warehoused by the credit registry for the benefit of all subscribers.

“The Reserve Bank will also embark on the process of licensing the private credit bureaus during the first quarter of 2017,” said Mangudya.

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