There is already a Central Credit Register, established in 1996. At a round table organised in Maputo today by the International Finance Corporation (IFC), the private sector arm of the World Bank, Samuel Banze, director of banking supervision in the Bank of Mozambique, pointed out that, prior to the 1996 reform, the banking system lacked any instrument to assess credit risk.
As a result, it frequently happened that the same companies were major depositors in some banks, and major debtors in others.
Non-performing loans, as a percentage of the credit portfolio, reached alarming levels.
With the establishment of the credit register, all institutions subject to supervision by the central bank were obliged to provide information on credit granted, and the guarantees offered by clients.
The information on the register was available to all participating institutions, but under the normal rules of banking secrecy.
According to Banze the challenge now is to expand the scope of the credit registration bureau, by including other data, and standardising the documents used for these purposes.
The round table, according to the IFC, sought "to discuss the important role that credit reporting and credit scoring play in modern risk management, to discuss what constitutes an enabling regulatory environment for the efficient running of credit bureaus, as well as define the possible next steps for the development of an effective credit information system in Mozambique".
The IFC statement makes it clear that it prefers private credit bureaus to one run by the central bank. It claims that "the availability and use of credit reports increases the quality of credit decisions and provides significant risk mitigation".
The use of such credit information, the IFC says, "allows banks to reduce loan processing time and cost by 25 per cent or more, and lower default rates by 40-80 per cent, contributing to the improved profitability of financial institutions and stability of the financial system".
SOURCE: AIM
