THE deployment of the credit registry is expected to be completed by the end of next week, a move that will flush out borrowers, who take loans from a number of institutions, thereby enhancing chances of default.
BY VICTORIA MTOMBA
The establishment of a credit registry came as a result of an amendment to the Banking Act, which empowered the credit registry to collect credit information from participating institutions, including non-regulated credit providers and utility bodies.
In his mid-term monetary policy statement, Reserve Bank of Zimbabwe (RBZ) governor John Mangudya said all banking institutions started providing credit test data to RBZ from August 29.
“The Reserve Bank will ensure that the credit registry system is stabilised before reports are generated for the market. It is anticipated that the deployment of the credit registry system will be completed by September 30, 2016,” he said.
The absence of a credit registry had seen an increase in non-performing loans (NPLs) with the ratio reaching 20,45% in 2014, raising fears that banks would cut back on lending critically needed to revamp the economy.
The credit registry is part of measures to reduce the non-performing loans ratio, which is expected to fall to 5% by December 31.
The NPL ratio declined to 10,05% as at June 2016 from 10,82% as at December 31, 2015.
“The declining trend in NPLs is a reflection of the successful efforts by banks to reduce their exposure to non-performing assets, including strengthening of credit risk management systems and intensified collections and workout plans, among others,” the central bank said.
RBZ said a legal and regulatory framework for the collateral registry has been developed in collaboration with Treasury and the World Bank.
Collateral registries are publicly available databases of interests or ownership of assets, allowing creditors to show their creditworthiness and potential lenders assess their ranking priority in potential claims against particular collateral.
A collateral registry allows business owners to use moveable assets such as motor vehicles and livestock to secure business loans.
Meanwhile, the Movable Security Interest Bill is expected to be presented to Parliament during the last quarter of this year, which will see small-to-medium enterprises using movable assets as security for loans.
RBZ said the Movable Security Interest Bill sought to empower the central bank to set up a collateral registry, which includes provisions, such as the creation, perfection, priority and enforcement of security interests.
“It is anticipated that the Bill will be presented to the legislature in the last quarter of 2016. The establishment of the collateral registry will go a long way in assisting members of the public who were unable to access credit and other banking facilities for lack of immovable security,” the central bank said.