Loan default rate down 6% – CRB

Loan default rate down 6% – CRB

Post was last updated: November 19, 2021

Lyness Nkungula

Representatives of one of the country’s credit reference bureaus, Credit Data (CRB), have indicated that loan default rate has decreased by six percent between 2011 and 2021.

They have since attributed the development to the provision of accurate credit data to financial institutions for them to make informed decisions on clients seeking loans services.

Credit reference bureaus collect credit information from institutions referred to as data providers, consolidate it and produce reports which lenders use when extending credit facilities or dealing in business transactions.

This is coming at a time the company is celebrating 10 years of existence in providing such services.

Credit Data Reference Bureau Managing Director Patricia Mwase said the decrease in loan defaulters indicates that lending or credit transactions are becoming less risky in Malawi.

“We, as a bureau, have been bringing confidence to the lenders as they now know who they are dealing with and also those that defaulted with genuine reasons are now able to talk to their debtors and make fresh credit agreements. We will continue to make players in the economy talk to each other in regard to credit,” Mwase said.

She added that, in the 10 years of running the business, the biggest challenge was building confidence in the market.

However, during the period the company helped different institutions recover loans such as K46.2 billion for the students grants board and K2.7 billion for the Malawi Rural Finance Company.

Bankers Association of Malawi Chief Executive Officer Lyness Nkungula said reports that the company issues help both lending institutions and customer in negotiating interest rates.

“We believe there is still room to improve knowing that technology is fast changing. We really commend Credit Data for handling themselves in a professional manner during the years they have been in existence and we believe that they will continue with the good work,” Nkungula said.

Credit Data is governed by the Credit Reference Bureau Act and regulated by the Reserve Bank of Malawi.

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