Published: 04 July 2014

The Reserve Bank of Zimbabwe has been urged to expedite the setting up of the Credit Reference Bureau which will help enhance credit risk management given the increase in non-performing loans.

The Credit Reference Bureau which has been on the cards for the past few years is expected to assist in reducing the increase in non-performing loans which are currently at 16 percent of the total deposits in the banking sector.

Economic analyst Washington Mehlomakulu believes given the credit information gap on the market, the setting up of such an institution will be critical in enhancing credit risk management.

"We have seen the continued existence of information asymmetry on the market and this has to some extent contributed to the increase in bad loans. The credit bureau will be critical in reducing the default rates," said Mehlomakulu.

Another economic analyst Kipson Gundani, however, believes while the credit bureau can assist in reducing the default levels, the lasting solution to the challenge lies in addressing the economic fundamentals, particularly the liquidity constraints.

"The major challenge is liquidity constraints and as long as the situation prevails then we are likely to see more defaults," Mr Gundani said.

Meanwhile, the RBZ says it is working on a special purpose vehicle to take over the bad loans with a view to minimise the effect of the non-performing loans. 
- zbc

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