Banks favour foreign firm over local bureau

Despite the Reserve Bank of Malawi (RBM) licensing a local credit firm, commercial banks have opted to work with a foreign-based company at the expense of the local one.

The RBM awarded a licence to the local firm, Credit Data CRM Limited, last November, but all banks still prefer Kenyan-based firm, CRB Africa, a situation that led to the new company to cry foul.

The situation forced the RMB to write the Bankers Association of Malawi (BAM) in December 2011, advising them to also deal with the Malawian company.

But BAM argued that banks are at liberty to work with a credit reference bureau of their choice.

RBM spokesperson Ralph Tseka could not comment on the matter as he was reported to be in Mauritius.

But in a letter, former RBM governor Dr Perks Ligoya contended that while banks at are free to deal with a reference bureau of their choice, they are supposed to be fair to ensure the effectiveness of the credit reference scheme.

“At this stage of data filling, all banks are required to furnish the data to both credit reference bureaus. We, therefore, urge you to inform all your members accordingly about our direction on the matter,” said Ligoya.

A credit reference bureau provides details of a company or an individual’s creditworthiness based on previous credit history which most often is provided by banks and other lending institutions.

In an interview last week, BAM executive director Linley Nkungula said the banks do not want to work with the local credit reference bureau, but discussions are underway with the RBM on the way forward.

One of the issues was that there was need to set up a single system to provide common data for the two companies or any other firm that will later come on the market, she said.

“We are not choosing or undermining the local company. All we are saying is that it would be simpler if we use one system because suppose we have 10 bureaus, the current situation will mean having 10 systems,” said Nkungula.

She said at the moment, it is as if the banks are only working with CRB Africa because it is a company that they have been working with before Credit Data CRB Limited came in.

In an interview, Credit Data CRB managing director Patricia Mwase said she cannot understand why her company is being shunned.

“It is now almost eight months since we got the licence. Should we say because we are a Malawian company and our banks prefer working with foreign companies?” asked Mwase.

She said the issue of the need for a single system has never been raised by BAM and said while CRB Africa made a presentation of its system, no attempt was made by the banks to see the presentation to guide their choice on which reference bureau to deal with.

In one of the letters that Credit Data CRB wrote to BAM early this year, Mwase complained that the institution was giving banks conflicting information about her company.

“We have faced resistance from some of your members who flatly refused and claimed that they are under instructions from your association not to deal with us in any way, this includes not providing us any information as required,” reads part of the letter copied to all commercial banks.