Credit Bureau sues Reserve Bank of Malawi for K218m – report

Blantyre-based firm, Credit Data Reference Bureau Limited, has sued the Reserve Bank of Malawi (RBM) over what it calls failure to compel commercial banks to start releasing customer credit information for its operational usage.

The firm, owned by former banker Patricia Mwase, is demanding K218 million from the central bank for, among other things, loss of income and incurred operational expenses,  Business Times reported  on Wednesday.

RBM has since filed defense as indicated in court documents for the case dated April 19, 2013 in which it has demanded that Credit Data Reference Bureau prove the matters in its claim and also indicated in the defense that the plaintiff has sued a wrong party.

Quoting court documents , the paper reported that Credit Data was duly incorporated on March 17, 2005 and was granted a license by RBM on November 17, 2011.

Charles Chuka RBM boss: Central bank sued
Charles Chuka RBM boss: Central bank sued

Following the licensing, Credit Data was mandated to collect credit information from financial institutions and was supposed to be provided with the information by commercial banks in the country.

The firm says it invested huge sums into the business which were used, to among others, buy software valued at K24.5 million for use in the business.

However, Credit Data says despite its license, banks have not shown interest to comply with the law by providing it with the information.

It says following a complaint from the company through the Bankers Association of Malawi (BAM), RBM on December 29, 2011 issued a directive to banks through BAM to furnish data to Credit Data but the directive was ignored by the banks.

Credit Data says the conduct by the banks was communicated to RBM and that its managing director met RBM governor on July 4, 2012 and reported the same.

It says, however, that in response to its complaint, the governor wrote them by email on July 18, 2012 that the regulator “wants to move forward without a strong hand”.

In its law suit, Credit Data faults the RBM governor for failure to take action to ensure compliance of the law by the banks.

RBM says, however, that its apparent failure to act on the matter is a result of gaps in the Credit Reference Bureau Act of 2010 which, it says, are causing implementation challenges.

The central bank says it was now advocating for the amendment of the CRB Act.

RBM also says that Credit Data’s claim does not meet the requirement of the Financial Services Act which gives immunity to the Registrar of Financial Institutions on suits against him and therefore.

The two parties are now awaiting judgment having been attending hearings.

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