The National Bank of Rwanda (BNR) has said that it will today launch the process of setting up a Credit Reference Bureau (CRB) in the country.
Once in place, the CRB will help banks, microfinance and other credit institutions to use expert evaluation before making lending decisions. The launch will take place this morning at Laico Hotel in Kigali.
“The National Bank of Rwanda is in the process of fast tracking the establishment of the private credit bureau. In this regard, Compuscan, a credit reporting and risk information agency, has been asked to manage this credit bureau in Rwanda,” a statement from BNR said.
Compuscan Information Technologies is a South African company which also operates in other East African Community countries including Uganda and Kenya.
The CRB will be responsible for providing accurate information on borrowers’ debt profiles and repayment history, an activity that is currently done by lending institutions.
The International Finance Cooperation (IFC) will assist Rwanda to come up with necessary draft laws that will be used in the regulation of the planned CRB.
The new developments come at a time the BNR says that there is soundness in Rwanda’s banking and microfinance, but also with serious challenges of liquidity which have limited access to credit by the private sector sectors.
According to BNR, Rwanda’s banking activities, measured by the total balance sheet increased by 33 percent, from Fwf384.1 billion in December 2007 to Rwf511 billion in 2008, the central bank said in its monetary policy statement recently.
The central bank also says that there is a significant improvement in the management of loan portfolio the banks and Microfinance institutions.
The Ministry of Finance says that Rwandan Banking sector has not yet been affected by the first round effects of the global financial crisis.
However, the ministry says that that there has been declining liquidity in the commercial banks over 2008 due to the mismatch of short term deposits and long term investment needs.
The declining liquidity in banking has been attributed to huge increase in credit to private sector to the tune of 31 percent for 2008.
James Musoni, the Minister of Finance and Economic planning recently told parliament that that in 2008 the increase of deposits in banks was slower only at 6.4 percent, caused by mainly less savings due to high inflation.