Prospective borrowers will soon start accessing enhanced access to credit following the reduction in time the Credit Reference Bureau (CRB) takes to process credit records from three days to five minutes.
CRB managing director Patricia Mwase said this in Blantyre on Tuesday on the sidelines of the signing of a memorandum of understanding (MoU) between the bureau and the Malawi Postal Corporation (MPC) and FDH Bank.
Through the MoU, prospective borrowers can receive their credit reports from the 182 MPC centres nationwide which will require a minimum of K2 000 from the users of the service as it will be registered mail with security issues.
The arrangement means that prospective borrowers will now be able to see upfront their credit history, and therefore, serve the creditors’ time to cross-check such with the bureau, which would usually take three days.
“This is the beginning [and] we are hopeful other financial institutions will join this initiative. We intend to involve the microfinance, cooperatives and the insurance industry with this initiative going forward.
“This will help to reduce default rates because borrowers will have to make good of what we are keeping for them as well as enhance access to credit because most of the lending institutions will have information handy about borrowers,” she said.
Mwase said the bureau has received approximately 613 000 records from the banking industry and only 103 000 of them are complete and up-to-date.
“The record trend hampered effective and efficient credit bureau service delivery; hence, we had to come out with this initiative to encourage the citizenry and business institutions to pre-check the records we are keeping about them as wrong records end up delaying important transactions; hence, causing stress and loss of business,” she said.
In his remarks, FDH Bank head of personal and business banking Kawawa Msapato said the partnership will help to reduce the bottlenecks that the bank has been facing in its quest to offer loans to its customers.
“We are hoping this will increase our appetite for lending as the clientele will have their personal credit history handy when coming for the loans. In the end, we believe to grow access to loans with this initiative,” he said.
Postmaster general Henry Shemu said while the partnership is an indication of increased mail volumes and business, efficiency in delivering its services will remain key.
Currently, individual household loans are reported to be on the increase, according to figures from the Reserve Bank of Malawi (RBM). n