Central Bank toughens on borrowers

Dec 27, 2009

<br>THE central bank will make possession of Credit Reference Bureau Service (CRBS) cards mandatory to accessing bank loans effective next June, a top official has disclosed.

By David Ssempijja

THE central bank will make possession of Credit Reference Bureau Service (CRBS) cards mandatory to accessing bank loans effective next June, a top official has disclosed.

The move is aimed at aligning the banking industry to the technology required of a modern banking system.

The CRBS, operated by CompuScan, a South African firm, delivers a biometric (body)-based customer numbering system for each borrower, while the Bank of Uganda (BOU) issues and supervises its operations.
The cards are backed by high level technology with particulars about the borrowers’ debt profiles and repayment history enabling lenders to make informed lending decisions.

It also allows inter-bank exchange of information in the process of accessing credit.
However, the central bank requires that all customers’ information in the CRB cards be treated with confidentiality.

“All commercial bank clients intending to access credit must have secured their CRBS cards from BOU by June 2010.

“We are making this mandatory after June 2010,” Juma Walusimbi, the head of communication, said in an interview after the BOU monthly press briefing.
Walusimbi disclosed that BOU had issued only 140,000 cards since the CRBS was launched late last year.
The current daily uptake rate stands at 1,250 cards, he added.

“We are planning to issue at least more than 600,000 cards to clients before next year ends,” Walusimbi said.
Uganda boasts of 23 commercial banks and five BOU-regulated microfinance institutions, most of which subscribe to the CRB system.

BOU and the banks plan to intensify public awareness campaigns on the value and economic relevancy of the cards.

If more borrowers take up CRBS cards, Walusimbi pointed out, the lending rates would reduce because it will save banks the time of establishing clients’ banking behaviours.

“These cards can even enable banks to lend money to their royal customers without requiring security but can alternatively consider credit worthiness depending on the loan repayment history revealed by the card system to serve as collateral,” he said.

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