Central bank setting up credit information system |15 February 2012

The information will come from different sources and be given upon the request of these institutions, the CBS said in a press release yesterday.

“Institutions taking part will be required to check the credit history of clients with the CIS when processing application for credit,” it said.

The bank said “consulting the CIS will allow these institutions to make more prudent lending decisions and better identify and manage the risk that credit is not paid.”

It said identifying risk is important in the development of a financial sector as it allows for more efficient allocation of credit.
“It allows for credit to be provided to individuals or businesses which are more likely to repay.”

“A CIS will also serve as an incentive for clients to maintain good financial relationships with credit-granting institutions. The availability of information on clients’ credit history will allow credit-granting institutions to price loans on the basis of risk which will be to the benefit of clients with good risk profiles,” said the bank.

The activities of institutions taking part in the CIS will be regulated by the CBS (Credit Information System) regulations, due to be gazetted early this year.

“Amendments have been made to the CBS Act 2004 and Financial Institutions Act, 2004 to allow for the establishment of the CIS within the CBS and to allow for the sharing of information,” said the communiqué.
 
“All information submitted to the CIS will be treated as confidential and only assigned individuals will be allowed access.

CIS institutions will include banks licensed by the CBS and other supervised institutions which give credit.

The target date for implementation of the CIS is the first quarter of 2012.