According to the Credit Referencing Activity Annual Report 2017, the increase was an improvement over the 17% decline in 2016 (from the 2015 position) which was attributable to the generally low level of economic activity in Ghana in the year 2016.
[ads1]The increased number of participating institutions and continuous sensitization of financial institutions also contributed to the increase in usage in the year 2017.
The year recorded a surge in the use of credit bureau services. This is an indication of the importance of credit reports in the credit administration processes of financial institutions.
Some financial institutions in the country have failed to provide data on the credit history of borrowers as mandated by law.
The 27-page report highlights on the performance, key developments and trends in credit referencing system in Ghana in 2017.
“The Credit Reporting Act, 2007 (ACT 726) was enacted to provide a framework for credit reporting and other related matters. The Act empowers the Bank of Ghana to have overall supervisory and regulatory authority in all matters relating to credit reporting.”
Financial Institutions in compliance
The report examines the status of all financial institutions regulated by the Bank of Ghana with regards to their level of compliance with the credit reporting act. From banks to rural and community banks (RCBs) the report provides some good data on the number of institutions in compliance.
“Section 24 of the Credit Reporting Act, 2007 (ACT 726) requires financial institutions to submit data on borrowers to credit reference bureaus within 72 hours of entering into the credit agreement and update the status of the loan on monthly basis. This requirement mandates all financial institutions to engage credit bureaus on a monthly basis and conduct credit searches as and when required.”
“The universal banks actively participated in the credit referencing system during the year under review by submitting data and conducting credit searches. A total of 17 banks representing 53% submitted data consistently to all credit bureaus in all months in the year 2017.”
“Data submission by the Rural and Community banks has also seen significant improvement with over 100 banks submitting data for at least six months in 2017. Thirty-six (36) rural banks submitted data consistently to credit bureaus whiles forty (40) rural banks representing 28% of the total number of rural banks did not submit any data to credit bureaus in 2017.”
“Data submissions by Specialized Deposit-Taking Institutions (SDIs) have improved over the years. We, however, continue to record some non-compliance among the NBFIs. For instance, 26% of total NBFIs did not submit data to credit bureaus in the year under review.”
The report outlined a number of challenges in spite of the success of the credit reporting system.
These include the quality of the data supplied to credit reference bureaus by financial institutions, the inconsistency if the data submitted and the low usage of credit reports.
The report recommends sanctions on financial institutions failing to comply with the act and more stakeholder education and awareness by the Bank of Ghana.