BOZ concerned over lenders blacklisting people with negative entry

Dr. Denny Kalyalya BoZ Governor

Dr. Denny Kalyalya BoZ Governor

The Bank of Zambia has noted with concern that lenders have tended to black list people who have a negative entry in their credit report.

Speaking at the launch of the credit reporting education and awareness campaign, Bank of Zambia Government Denny Kalyalya says this is evident from the number of complaints of denial of credit to persons that are credit worthy, in spite of having a negative entry in the reports.

Dr Kalyalya says the negative listing has been used to deny credit, which is not the intention of the credit reporting system.

He states that the system is meant to be a tool that enables lenders to efficiently obtain information about the credit behaviour of borrowers so that the lenders can make an informed decision on how to treat a borrower.

Dr Kalyalya adds that the system aims to reduce information asymmetry between a lender and a borrower and enable the lender to apply an appropriate risk price.

And Dr Kalyalya has appealed to all stakeholders, particularly, the financial service providers, to participate in the communication and awareness raising activities as well as the effective use of both the credit reporting system and the Movable Property Collateral Registry.

He says the central bank has observed that utilization of both systems has continued to be below expectation.

Speaking at the same event, International Finance Corporation (IFC) Resident Representative for Zambia and Malawi, Madalo Minofu reiterated the World Bank’s continued commitment to helping Zambia develop a strong and sustainable financial sector, including through credit infrastructure.

She states that credit infrastructure is one f the building blocks that allows financial institutions and other lenders to grow their portifolio, increasing access to credit,, at the same time, maintaining financial stability.

Ms Minofu says for the credit bureau and the collateral registry to truly have an impact on the lives of Zambians, credit providers and customers alike need to become aware of what these systems are, how to use them, and what their benefits are.

 

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