The days when borrowers would acquire loans from banks and default, then move to another bank to get more money are slowly coming to an end, thanks to the Credit Reference Bureau, Ivan R. Mugisha reports.Financial institutions thrive on the interest rate charge on disbursed loans. This makes loan defaulting the single biggest threat to banks’ profitability and efficiency.But with the coming of the Credit Reference Bureau (CRB), which stares data on all bank borrowers, this has been minimised, according to experts interviewed by Business Times.Since the introduction of CRB Africa in Rwanda in 2010, spearheaded by the National Bank of Rwanda (BNR), information on the behaviour of borrowers was centralised. This made it easy for banks to indentify credit worthy borrowers and the habitual defaulters to avoid.According to the central bank, all financial institutions signed agreements with CRB Africa, through which they are obliged to provide information on banked clients to ascertain the credibility of clients and their ability to repay loans.Several bankers interviewed by Business Times said they use CRB Africa data to analyse clients who need loans and the results are overwhelming."It was hard before CRB Africa was introduced. You would find a client getting a loan from bank A after defaulting from bank B because this kind of facility that enables sharing of information on clients did not exist,” James Gatera, the Bank of Kigali chief executive officer, said."Now it is much easier because all banks crosscheck with the data at CRB Africa before they issue loans out. No bank can now give out a loan to anyone who defaulted elsewhere because the information is available.”While presenting the quarterly monetary policy and financial stability statement last week, John Rwangombwa, the central bank governor, said during the first half of last year, all mandatory participants, including banks and micro-finance institutions, provided data to CRB Africa and used credit reports issued by the bureau. "In addition to the mandatory participants, voluntary participants such as telecoms and EWSA (Energy, Water and Sanitation Authority) registered to share credit information. Therefore, client accounts submitted to the bureau increased by 352 per cent from 1,562 in December 2011 to 7,055 in June 2012,” Rwangombwa said."BNR will continue to improve quality of credit information-sharing with voluntary participants by including retail traders, especially supermarkets and other credit granting institutions.”In support of the development, a report by CRB Africa indicates that, the usage of credit reports by financial institutions increased dramatically by 385 per cent from 2,467 between 2011 and 2012. By June last year, all commercial, as well as 32 micro-finance institutions and Umurenge SACCOs were also participants in data collection at CRB Africa.Additionally, insurance companies started sharing information with CRB Africa in 2011, thus increasing the number of policy accounts submitted from 6,003 in December 2011 to 31,507 in June 2012."There are many people who do not know how to use loans after acquiring them from SACCOs and, therefore, are susceptible to defaulting. Initially, this category of people would even affect the genuine clients because the process would be made stringent to sieve out the defaulters,” Gilbert Habyarimana, the deputy director general of the Rwanda Co-oporative Agency."SACCOs now heavily rely on information from CRB Africa to reduce the risk of defaulters. It has also helped to change the behaviour of many people, who understand that getting credit relies on their history of credibility.”Experts argue that the presence of CBR is the reason why non-performing loans are decreasing both in banks and micro-finance institutions.According to BNR statistics, non-performing loans fell to Rwf45.3b in June 2012 from Rwf50.5b in December 2011, indicating a 10 per cent improvement.Micro-finance institutions also recorded an improvement, with non-performing loans ratio reducing from 12 per cent to 8.3 percent. They were supported mainly by good performance by Umurenge SACCOs whose non-performing loans rate dropped to 2.6 per cent in June 2012 from 5.6 per cent in December 2011.To improve the creditworthiness of Rwandans even further, the central bank, together with the Africa Development Bank, started a public awareness campaign in June 2012 to sensitise consumers, participants and policy-makers on the role of sharing credit information.