Public to make written submissions on Credit Bureau Regulations

28 Aug 2013 12:30
WINDHOEK, 28 AUG (NAMPA) - The Bank of Namibia (BoN) has commenced with the process of drafting Credit Bureau Regulations and has invited the public to give their input on the matter by 26 September this year.
BoN Assistant Governor Michael Mukete made the announcement at a media conference here on Wednesday, saying members of the public can make written submissions to the bank.
He noted that the central bank’s view is that the existing credit bureaus in Namibia are legal entities registered in accordance with the relevant laws by the Ministry of Trade and Industry.
“That means they are not illegal. What is missing in our legal system at the moment is a specific law regulating how these entities should manage the information under their care, and there is no centralised credit information system that allows banks and other lenders to know the total exposure per client and their credit history so as to avoid overextending of consumers,” he explained.
At the same time, currently credit providers are under no obligation to supply information to credit bureaus. Mukete indicated that it is against this background that the proposed regulations will seek to establish rights and obligations of credit bureaus to be registered and licensed by BoN, and that all credit bureaus are to have a centralised system.
Such a system should have the capability of calculating total credit exposure per client, and requires that all credit providers should supply information to all credit bureaus. Mukete noted that the regulations will also provide clear guidelines, amongst others, pertaining to the kind of data to be collected and retention period.
In doing so, the bank would bring Namibia in line with international best practices in financial risk management by allowing for transparent credit history information to be available for decision-making and facilitating cheaper access to funding. This is achieved by availing information on borrowers’ credit worthiness to lenders and in turn, if lenders are satisfied with the credit record of a customer, they will be willing to charge the customer reasonable interest rates. At the same time, it contributes to financial discipline at an individual level because those who are not disciplined enough to pay back borrowed money will have difficulties getting credit and if they get it, they will pay a high price, according to Mukete.
A good credit information system also contributes to financial system stability. Armed with consolidated records in the credit information system provided by credit service providers, regulators are better equipped to assess the indebtedness of all households in the country. The BoN Assistant Governor said this enables regulators to be in a position to determine whether the financial stability of the country is under threat and whether necessary action needs to be undertaken to contain the situation.
“The time has come to regulate these entities and now, we have to move forward,” he added.
Currently, there are three credit bureau doing business in Namibia, including the Credit Information Bureau Namibia, TransUnion ITC and Compuscan.
In June this year, the Namibia Bank and Allied Workers Union (NBWU) opened the debate on credit bureaus, noting that TransUnion ITC and Compuscan, both credit bureaus, are operating in Namibia illegally and are not regulated.
Both TransUnion ITC and Compuscan are South African credit bureaus, providing consumer and commercial credit information within South Africa and in other African countries, including Namibia.