Bank of Mozambique wants more credit check tools

13 October 2006

Maputo, Mozambique, 13 Oct – The Bank of Mozambique aims to have more powerful tools to carry out credit history checks on people who request loans from retail banks and other financial institutions.

In a round table meeting organized in Maputo by the International Finance Corporation (IFC), the World Bank’s private sector arm, Samuel Banze, director of banking supervision of the Bank of Mozambique, said that before the 1996 reform the banking system had no credit check mechanisms.

In 1996, as part of the reform of the banking system, a Central Credit Register was created.

Before that time, it was often the case that a company was a creditor at one bank and a debtor at another bank and bad debt was reaching alarming levels. This situation came to a halt when the central credit register was created.

The current challenge, according to Banze, is to expand the scope of the central register by adding more data and moving ahead with the standardization of documents used for credit operations.

According to the IFC, which prefers the use of bank-based credit registries to one organized by the central bank, a more precise idea of a specific customer’s credit risk reduces processing times and costs by over 25 percent and significantly reduces bad debts, contributing to the stability of the financial system. (macauhub)