Skip to main content

Rural banks shun credit reports.


Ernest  Addison(Governor of Bank of Ghana)


It has emerged that some financial institutions, especially rural banks, conduct credit searches only on their commercial customers or first-time borrowers.

The practice is in violation of Section 26 of the Credit Reporting Act, 2007 (ACT 726), which mandates all financial institutions to obtain credit reports on all prospective borrowers before granting or refusing a credit facility application.
According to the Credit Referencing Activity Annual Report, 2017, authored by the Financial Stability Department of the Bank of Ghana (BoG), the body presented the performance, key developments and trends in credit referencing system in the country said trend indicated a low usage of credit reports.
It said, for instance, that some rural and community banks (RCBs) had not conducted credit checks on some borrowers with the notion that they were their regular customers, while majority of microfinance institutions (MFIs) were yet to register with credit bureaus to obtain credit reports.
Some improvements
According to the report, data submission improved significantly last year, with individual loan records submitted to credit bureaus increasing by 17 per cent on an average monthly basis and data submitted on commercial loan customers also increased by 42 per cent monthly.
Also, a total of 1,418 complaints and disputes were received from customers in 2017, representing an increase of 11 per cent compared to 1,280 complaints in 2016.
Some of the complaints involved persons who had credit facilities registered on their credit reports when they had not received any credit facility from the respective institutions.
The report attributed the increasing trend to the increased awareness of credit referencing among the public and said that all complaints received in the year under review were resolved.
Cedit Bureaus
The three credit bureaus are XDS Data Ghana, Hudson Price Data Solutions Limited and Dun & Bradstreet Credit Bureau Limited.
Some of the existing products and services provided by these bureaus are Consumer Basic Credit Report (This contains personal information, credit account summary, detailed credit facility status, and monthly payment behaviour); Business Check (this engine allows subscribers to verify the validity of company name, registration number, and Tax Identification Number (TIN) of registered entities); and Industry Reports (these include variety of products to enhance the Know Your Customer (KYC) procedures of financial institutions with respect to bank’s business customers). 

Some developments
The report stated that inefficient banking software and lack of expertise was a challenge in the year under review.

“To provide good quality data, financial institutions need to have robust banking software that will facilitate data extraction and management. Our observation, however, is that several institutions, especially MFIs and Non-Banking Financial Institutions (NBFIs) do not have the requisite tools for extracting data,” it said.

It added that the Bank should engage in public education and awareness programme with the other stakeholders to ensure that consumers and financial institutions were fully aware of their rights and responsibilities under the Credit Reporting Act.

Comments

Post a Comment

Popular posts from this blog

Happily, the two directors who caused PBC woes lost their bid to be NPP parliamentary candidates – Mahama

GAPNEWS Happily, the two directors who caused PBC woes lost their bid to be NPP parliamentary candidates – Mahama Former President John Dramani Mahama has said that the directors of the Produce Buying Company (PBC) will be investigated for their actions that caused the problems of the company. Mr Mahama accused the two directors of attempting to seek refuge in Parliament from accountability, but God being so good, they lost their bid to be parliamentary candidates on the ticket of the New Patriotic Party (NPP). Speaking with cocoa farmers in Kumasi and the General Agriculture Workers Union on Thursday, February 8, the flagbearer of the National Democratic Congress (NDC) said, “The workers of PBC have not been paid for about 8 months to 9 months and it is not known when they will receive their salaries, it is instructive to note that two of the directors who have left PBC into the ditch could see that they had finished the company and so they were looking for new careers and so they wen...
Post a Comment
Read more

Finance Minister Amin Adam outlines seven priority points in his first meeting with mg’t of MoF

GAPNEWS Finance Minister Amin Adam outlines seven priority points in his first meeting with mg’t of MoF The Minister for Finance, Dr. Mohammed Amin Adam has outlined seven priority points in his first meeting with the Management of the Ministry. He met the entire management on Monday February 19 I will bring new urgency to bear on the work so we can run and fly and make an impact within this short period” he said. Dr Amin succeeded Ken Ofori-Atta at the Ministry in the recent ministerial reshuffle done by President Akufo-Addo on Febraury 14. Earlier, he told journalists that “Revenue collection will be pursued aggressively. So you are going to see me moving around the revenue centres, the ports, the airport, and the market areas to encourage the staff of GRA to collect more revenue but also to institute a friendly approach to collecting revenue.”
Post a Comment
Read more

Re-assigned ministers must be vetted –Dafeamekpo

GAPNEWS Re-assigned ministers must be vetted –Dafeamekpor The Minority in Parliament has said that all the re-assigned ministers will have to be vetted and approved by the Appointment Committee of Parliament. The opposition lawmaker says served notice to contest the re-assignments of 5 ministers of state to the office of the president at the Supreme Court. South Dayi Member of Parliament contends that the ministers must be subjected to parliamentary approval and not just occupy the office without approval. “I am saying on the authority of the constitution that those persons’ appointments were revoked by the president, and their re-assignment must be subjected to parliamentary scrutiny. “So, we are demanding that those five ministers he has reassigned must be subjected to parliamentary vetting, and that is the procedure, so they cannot escape parliamentary scrutiny,” he said in Parliament on Friday. He added “We will do our duty as the constitution demands, and we will demand that their...
Post a Comment
Read more