BoG’s Credit Reporting System likely to be hindered by incorrect data
Incorrect data collected by participating institutions in the Bank of Ghana’s (BoG) Credit Reporting System (CRS), is likely to affect the creditworthiness of some borrowers as well as hinder the overall effectiveness of the system.
This is according to popular banking consultant, Nana Otuo Acheampong.
The banking consultant has therefore urged the Central Bank and the institutions participating in the Credit Reporting System (CRS) to ensure accuracy in the data they collect.
Making the call on the Central Bank and the participating institutions, Mr Otuo Acheampong, noted poorly kept records could lead to innocent borrowers being rated unfairly by lenders.
Speaking on the expansion of the list of participating institutions in the CRS in an interview, Mr Otuo Acheampong said the Central Bank’s move is likely to impact the pricing of credit to borrowers across the country.
“Pricing of credit is primarily looking at the risk complexion of the borrower, and so the better the risk, the better the price that will be put on that credit. So this is in a way going to help both the borrowers and the lenders because borrowers with good credit will get access to cheap credit, those with bad credit will access more expensive loans.”
“So it’s a good start, but the problem that we may have is with the accuracy of the records that we have. We have instances where after paying for loans, banks still have inaccurate information on borrowers years later, which will affect your credit-worthiness. So with the expansion of the list, we have to ensure accurate records are kept so no one is disadvantaged,” he remarked.
His comments come on the back of the announcement of the expansion of the list of companies that can participate in the country’s Credit Reporting System.
The Credit Reporting System is a database established under Act 726 to promote the sharing of information on the credit history of debtors with lenders and other users of the Credit Reporting System.
Years after the passage of the Credit Reporting Act, 2007, the Bank of Ghana in pursuant to the Credit Reporting Regulations, 2020 (L.I 2394), has expanded the list of institutions required to participate in the Credit Reporting System to include the institutions like Telecommunication Companies, Utility Companies, Retailers, Mobile Money Operators, FinTechs, Student Loan Schemes provided by private or government agencies among others.
Eligible participants in the CRS according to the Central Bank are required to:
- Provide credit information on their customers to all Credit Bureaus licensed by the Bank of Ghana within seventy two (72) hours after entering into a credit agreement or facility; and
- Obtain credit reports on prospective customers before concluding credit transactions with such customers.