Credit reference Act amended
Parliament on Tuesday amended the Credit Reference Act to, among other things, allow banks to provide client information to credit reference bureaus without taking a risk of lawsuits.
The development may bring to an end a lengthy battle between credit reference bureaus and banks that have been arguing on the matter for years.
While the bureaus felt they were legally empowered to get information from banks, the financial institutions on the other hand argued that it was not mandatory for them to provide clients’ information or seek such information from the bureaus.
Reacting to the development, Credit Data managing director Patricia Mwase, whose bureau championed the fight for the bill, said the amendment was overdue and will make the bureaus functional.
“The overall winner is the honest hardworking person as they will now be able to access financing and can also help them negotiate for lower interest charges if their reports are positive,” said Mwase.
The Office of President and Cabinet (OPC) recently directed all local councils and government entities to start providing information to credit reference bureaus following remarks by President Peter Mutharika on the importance of credit reference bureaus in the economy.
Parliament first passed a law on credit reference bureaus in 2010 to allow scrutinisation and certification of individuals and companies when applying for loans from banks and other lending institutions.
However, banks have since then not been cooperative in the provision and obtaining of information from the CRBs.
At some point, Credit Data took banks, through the Bankers Association of Malawi (BAM), to court for their failure to comply with the law and refusing to provide them with required information.