Malawi: Parliament forces banks to provide information to credit bureaus
It has adopted amendments to the Credit Reference Bureau Act.The parliament of Malawi has endorsed amendments to the Credit Reference Bureau Act on Tuesday (November 17th), following complaints by Credit Reference Bureaus (CRBs) that most commercial banks were reluctant to submit information.
The changes mean it is now mandatory for banks to provide information including material changes on borrowers' credit history.
In addition, banks will now be required to verify
history of any potential borrower through CRBs before approving a loan.
"This means our law makers agreed with us that the Act had some gaps which some banks exploited, but now we will be able to get data for our operations as stipulated in the Act," Patricia Mwase, Director at Credit Data CRB Limited, told the Nyasa Times.
In September, the country's government issued an order requiring all its agencies to start cooperating with CRBs by providing information to help them collect data for their credit reference services.
The Reserve Bank of Malawi also recently unveiled new punitive administrative penalties targeting financial institutions who do not respect the Financial Services Act.
Banks are for instance expected to pay between K25 million (€39,500) and K40 million on offences related to failure to submit information.
They also face punitive penalties when a credit facility to an insider or related party is not secured by collateral, or when one of their senior management official serves on the board of a credit reference bureau.