Operations of the first private credit reference bureau that will facilitate financial institutions and banks to readily provide credit to the economy are scheduled for early next year, Business Times has learnt.
A Credit Reference Bureau (CRB) is an entity that collects and compiles information concerning the repayment behavior of individual and business, for resale to banks and other credit providers.
“The status of today is that we have identified three service providers. We have issued requests for proposals to them and the deadline for submitting the proposals has been set for mid –January,” Francois Kanimba, the Central Bank Governor told Business Times on Monday.
The identified service providers include, South African based Compuscan Credit Reference Bureau; Nairobi based Credit Reference Africa and another unidentified firm from Europe.
After submission of proposals the selection process will take about 2-3 months, the Governor said.
The private CRB is expected to reduce the Non Performing Loan (NPL) portfolios and also increase access of credit by the private sector.
The level of NPL has reduced significantly from 13.8 percent at the end of December 2007 to currently 11 percent.
The CRB will operate in such a way that a customer provides information when opening an account or applying for credit, the customer then signs “acknowledgements/consents” to allow information to be submitted to credit bureau.
Credit information providers submit information to the credit bureau which updates it regularly. The credit bureau collects, validates and merges information into its database for use in generating a credit report.
The new private bureau is expected to provide more reliable information to financial institutions to offer credit, compared to the Central Bank’s public credit registry which provides general information about borrowers.
It is a data base of all the borrowers and they money they have paid.
“It only provides the current portfolio; it does not track the history of the creditor. The credit reference bureau will be able to track performance (full records of borrowing and repayment) that can give confidence to financial institutions to give credit,” Kanimba observed.
According to statistics, the registry is used by commercial banks (via website and direct link) and 13 microfinance institutions (via website only). The database holds around only 61,000 current accounts on about 50,000 borrowers in Rwanda.
The private Credit Bureau will bring on board other organizations like utility companies, telecommunication companies and insurance companies.