Parliament gets tough on Malawi banks, amends CRB Act

Parliament on Tuesday afternoon endorsed the amendments to the Credit Reference Bureau Act, the development which will not go down well with the country’s commercial banks.

Mwase: Amendments will kill out monopoly

Mwase: Amendments will kill out monopoly

Patricia Mwase, Director for Credit Data CRB Limited

Patricia Mwase, Director for Credit Data CRB Limited

Lately there have been complaints by Credit Reference Bureaus (CRBs) that most commercial banks were reluctant to cooperate in submitting information despite the enactment of Act in 2010.

And the amendment to the Act comes at a time the Reserve Bank of Malawi (RBM)took strong measures against the conduct of banks that do not cooperate with the CRBs.

According to the amendments, it is now mandatory for banks to provide information including material changes on credit history of the bank’s borrowers and customers to CRBs.

Aside that, banks will now be demanded to verify with CRBs on history of any potential borrower before approving a loan.

One of the CRBs in the country has marvelled at the development, describing it as a positive step.

”It means our law makers agreed with us that the Act had some gaps which some banks exploited, but now we will be able to get data for our operations as stipulated in the Act,” explained Patricia Mwase, Director for Credit Data CRB Limited.

Mwase believes the amendments will kill out monopoly on the market where some banks refuse to work with other players in the credit referencing bureau sector in preference to one company.

The country has two CRBs, CRB Africa Limited and Credit Data CRB Limited.

In September government issued an order demanding all its agencies to start cooperating with the CRBs by providing them with information to help them in the mobilization of data for their credit reference
services.

According to a directive from the Office of the President and Cabinet (OPC), all local councils and government entities should start cooperating with Credit Reference Bureaus (CRBs) in the country.

Meanwhile, RBM charges a punitive penalty of K25 million on commercial banks for failing to submit information including material changes on credit history of the bank’s borrowers and customers to CRBs.

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10 thoughts on “Parliament gets tough on Malawi banks, amends CRB Act”

  1. John says:

    Kaya zanu izo.Ine chomwe ndaonapo ndi ma hipwo!

  2. Fanny says:

    Can anyone give me the contacts of this lady ?I want to send my daughter to her to be taught how to be strong like her.She is a rare breed.Is she married?

  3. kambwali says:

    as loan client we have the right to confidentiality and it does not make sense for my info to be given to someone

  4. Aluweka says:

    Just my two Kwacha worth of a comment here as I have noted some of my esteemed Malawians who have commented earlier on this topic

    The credit bureaus play a vital role in any economy and for once I think our govt must be commended for this. Its very crucial to have independent credit references bureaus as that will always assist credit providers to properly assess the risk each applicant present ri and affordability levels. The challenge we have there now in Malawi is that almost everybody is painted with the same brush when it comes to pricing instead of providing rates to each individual applicant according to their risk profile. If a person skips paying his monthly/quarterly repayments on any contractual debt and the credit provider of that particular debt provide the monthly/quarterly information to the credit reference bureaus that applicant will be viewed as a high risk client therefore the potentials credit provider may decide to either decline the loan to that applicant or grant it dependent on the seriousness of the default but they will highly price it ( charge higher interest rate) in return we will start seeing lower %ges of defaulting clients as people will start to get the importance of paying your debt on time. Another aspect is that credit providers will be able to properly assess affordability levels of each applicant as people always don’t declare their true commitment figures but with the credit bureau reference in place each credit provider would be able to obtain a full credit profile for any applicant and see their actual levels of exposure in return a well informed decision can be made based on real data.

    I must caution though that in the absence of one national Identity document the effectiveness of these bureaus wont be there ie..If I go to national bank and apply for a loan using my passport and default on that loan then I decide to go to FMB and apply for another loan using my drivers License or voter’s card ( if its acceptable form of ID) but these bear different names but am the same person i don’t think FMB will be able to pick up that I have been defaulting on my other loan at NBM. So its very important that we have the national Identity numbers for each citizen and this will indeed be crucial for ou development.

    If individual profiles are now to be provided by CRB people will be able to get better rates etc because the riskier an applicant is the higher the rate and the better one’s repayment profile is the lower the rate banks may charge you but at the moment people are being painted with the same brush ( High risk) and banks have taken advantage of this in turn they have been charging exorbitant rates forcing people to default. We must always remember no economy can grow in the absence of a viable and profitable private sector and no private sector can grow in the absence of credit being extended to businesses in order for them to sustainably grow their businesses.

  5. Bahasa says:

    CRB s mudzilipiratu misonkho

  6. Kulibe kantu says:

    The Reserve Bank of Malawi is also to blame. It is toothless. They are not tough enough. Parlaiament should also summon RBM to find out why they are not enforcing the law.

  7. Wa Nzeru Wa Kummawa says:

    This article will not attract a lot of comments as it is too technical for most of the audience here. As important as it is. Most do not realise the implications of the amendment to the CRB Act.
    Basically unscrupulous borrowers cannot be allowed to borrow if their history is shared. Defaulters will be known if such information is shared.
    Unfortunately most Malawians will have commented if the article headline were:
    “Hubby’s dick chopped by wife while caught bonking a housemaid”

    “Minister caught pants down in a hotel room”

    “Pastor caught with another man’s wife shouts touch not the annointed one as angry neighbours chase him”

    I can go on and on but I thought Malawians should equally comment on issues that really matter sometimes.

  8. Chikopa says:

    This is good news because banks have made profits by circulating bad debts without making provisions. Ndiye apatu nyani agwa mumtengo. Banks hate this Mwase Lady and she has been boarding minibuses because of lack of business yet she was the first one in Malawi to do debt tracing etc. Banks preferring foreigners. Can you imagine that. A Malawi nsanje maningi stereki.

  9. Mwaziona mpungwepungwepaka ku ma Bank?whats the justification imposing penaly k25m kenaka rbm kukahonga politician? Crazy this is banks shud manage their own credit unit non of nuziness ya crb…who owns crb and why dp we need it?

  10. Antoni apaphata says:

    Local councils do not have the capacity to comply. Another white elephant

Comments are closed.