Baz to establish credit bureau by September

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Gamma Mudarikiri

THE Bankers Association of Zimbabwe (Baz) is expected to finalise the establishment of a credit bureau by September this year, a move set to reduce information asymmetry between lenders and borrowers, Africa Development Bank (AfDB) said.
In its July economic report, AfDB said the establishment of the much-awaited credit bureau was at an advanced stage and would help lenders assess credit risk more accurately and help in lowering the cost of borrowing.
Baz has been pushing for the establishment of a credit bureau since 2009 in a bid to promote the exchange of credit information among lenders in the sector, largely affected by non-performing loans.
The existence of a credit bureau will help financial institutions make informed lending decisions, support automated underwriting and also lower operational costs for banks.
Banks have been negatively affected by an increasing level of non-performing loans owing to the absence of a credit bureau.
Finance minister Tendai Biti last month said non-performing loans increased to 9,9% of all advances as of June this year, compared to 7,55% in the same period in 2011.
Total banking sector loans grew 18,5% to US$3,7 billion as of June, compared to US$2,7 billion in December last year. Lending to individuals grew by 18% as at June, compared to 8,6% in the same period in 2011.
Lending to the agriculture and the services sectors dropped 3,6% to 15% and 13%, respectively.
The banking sector continued to advance only short-term loans of a maximum tenure of two years. Coupled with subdued capital inflows, this had resulted in the economy being deprived of investment in capital intensive projects that are imperative for growth.
Total bank deposits at half-year, however, increased to US$4,2 billion, representing a 31,8% growth from US$3,05 billion as at December 31 2011.
In his mid-term monetary policy statement last week, Reserve Bank of Zimbabwe governor Gideon Gono said although growth in deposits had now slowed down, there had been an increase in time deposits of more than 30 days which had grown by 96,18%, while depositis of less than 30 days grew by 13,54%.
Gono said the deposits partially reflected the shifting of economic agents from non-interest-earning balances to interest-earning accounts. This was because many banks quoted demand and savings rates at below 3,8%, while time deposits attracted rates as high as 24%.
However, despite the growth in deposits, the deposit base continued to be transitory, a development which continues to negatively impact on the intermediary role of banks.

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