Frustrations from within and outside the banking halls have combined to limit the growth of Credit Bureaux system put in place to forestall the re-occurrence of banking crisis occasioned by lax risk management, Nigeria CommunicationsWeek can now reveal.
Almost all the banks are yet to understand how to use the data originating from credit bureau to identify people who are loan defaulters.
Also some banks scared of increasing their overheads still process loans manually with its attendant labour and time wastage.
Nigeria CommunicationsWeek gathered that though 23 banks have so far signed on to use credit bureau agencies, the popularity of the credit ratings are yet to catch on.
There are also worries about the reliability of information collated and managed by the credit bureau agencies especially in a society where multiple identifications for potential fraudsters and credit defaulter are easy to acquire.
But a group going by Rennaissance Professionals, said that banks have become ultra cautious and are no longer disbursing loans.
There is also a departure from the system where Nigerian banks used to lend on more or less a 100 percent collateralised basis.
Findings however show that some of them are offering unsecured lending products, which are even riskier but necessary to expand the market.
But Alan Goodrich, Business development director, Experian MicroAnalytics said: “It is important that banks use credit bureau to their fullest to reduce credit risks and prevent over indebtedness. The costs of getting unsecured lending wrong are extremely high, matched however by very high rewards of getting it right”.
“The important aspect for banks in Nigeria is to realise that they must work in parallel to the establishment of credit bureau to implement the tools and know-how in their organizations,” Goodrich said.
Jim Odumosu, a financial expert said that it is important for the Central Bank of Nigeria (CBN) to build a system where information from all the credit bureau are shared between industries and banks in such a way that the system will trigger a defaulters past credit history wherever he/she goes borrowing again.
Nigeria CommunicationsWeek gathered that the existence of predatory debtors in the banking system whose modus operandi involved the abandonment of their debt obligations in some banks only to contract new debts in other banks amongst others prompted the Central Bank of Nigeria to mandate banks and financial institutions in the country to use the services of licensed credit bureaus.
According to the apex bank, the paucity of credit information had inhibited consistent classification of credits granted to certain borrowers and their associated companies.
The CBN in May 2009 licensed XDS Credit Bureau as the first credit bureau in the country and followed this with the licensing of CRC Credit Bureau later in 2009 and CR Services Credit Bureau in early 2010.
The whole essence of a credit bureau is the availability of a solid credit information service on borrowers.
“We are not ruling out the fact that there will still be pockets of defaulters but with the credit bureau, we will not have the record non-performing credit portfolios in banks in 1980s and early 1990s” Odumosu said.
Nigeria CommunicationsWeek also gathered that credit information on customers will form a major plank of the second phase of consolidation of the banking industry.
