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Credit Reference Bureau’s help recover millions

A report from Credit Data Limited shows that the Bureau has managed to recover over K73 million which was initially written off as bad debt six months after the Credit Reference Bureau (CRB) Act was enacted into law.

Further, an equivalent of K97 million has been negotiated and restructured with the lenders following the amendment and compliance of financial Institutions to submit data and access reports from Credit Bureaus.

Bankers Association of Malawi (Bam) and the Student’s Loan Fund are among major players that have benefitted from the initiative.

President Peter Mutharika made history when he assented to the revised Credit Reference Act following approval of its amendments in Parliament on November 17, 2015.

The amendment to the Act, which was initially enacted in 2010, was aimed at freeing institutions such as banks to provide information regarding their clients to Credit Reference Bureaus without running the risk of breaching bank/client confidentiality.

Credit Data Managing Director, Patricia Mwase, confirmed that the Bureau has managed to clean up obligations worth over K5 million by checking records that were submitted by various players.

She said most of the records were from the banking and insurance sectors.

“In our observation, we found that a figure of K657 million which would have been given out as loans to already high risk borrowers was avoided after the lenders checked with our Bureau and were given the non-performing status,” she said.

The analysis does not include the Microfinance Sector as most players are yet to submit data for processing.

“We also hope the trends will go up as more and more institutions have started appreciating the existence of Credit Bureaus,” she said.

In an earlier interview, Mwase said while progress is being made, the Bureau requires more time and manpower as the data being submitted required a lot of cleansing.

But she said to mitigate the challenges; the Bureau is engaging Bankers Association of Malawi (Bam), Microfinance Network and Insurance Association of Malawi.

If successfully implemented, the Credit Reference Bureaus will assist in negotiations for lower interest rates for low risk borrowers.

The Credit Reference Bureau Act makes it easy to scrutinise and certify individuals and companies before they are given loans by banks and other money lending institutions.

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