A total number of 2,820,946 enquiries were made on the databases of credit bureaus in 2019, the Bank of Ghana’s Credit Referencing Activity annual report has revealed.
This according to the report represented an increase of seven per cent from last year’s position of 2,629,400 enquiries.
The consistent increase in the use of credit bureau services according to the report affirmed the importance of the credit referencing system in the credit administration processes of lenders.
“It is now evident that a great number of lenders use the services of the credit bureaus for the associated benefits rather than for mere regulatory compliance. In line with Act 726, licensed financial institutions are mandated to conduct credit searches on prospective borrowers prior to granting or refusal of credit facilities,” the report said.
The report said during the period under review, there was an average of 235,079 enquiries conducted by financial institutions on a monthly basis.
“Sixty-one per cent of all enquiries conducted on the database of credit bureaus were regarded as hits. This means that the searches produced some information on the persons being searched upon,” the report said.
The remaining 39 per cent searches the report said did not produce any information.
One of the possible reasons for the increase in the use of the credit reference bureau, the report said “the person being searched upon has no current or previous credit facility (first-time borrowers), or the credit information of the person being searched upon has not been submitted to the credit bureaus by the data provider, or poor data quality and inconsistencies in identification information.”
The report said enquiries made on individual borrowers/customers of financial institutions accounted for 70 per cent of total enquiries in 2019.
Enquiries on business customers increased by 25 per cent compared to five per cent of total enquiries in 2018.
“Savings and Loans Companies and Finance houses accounted for 56 per cent of the total enquiries in 2019 making them the major users of the credit referencing system, a position the sector has maintained over the years,” the report said.
It said “the increasing number of payroll lending as a main lending product of this sector explains the continuous increase in enquiries.”
Enquiries conducted by banks the report said increased by three per cent compared to 2018 position of 28 per cent of total enquiries.
“There was a reduction in enquiries from the Rural and Community Banks compared to the previous year. RCBs conducted 192,455 searches representing a reduction of 10 per cent of enquiries from 2018. It was observed that compliance among the RCBs declined due to very high staff turnover on the roles relating to credit referencing,” it said.
BY DAVID ADADEVOH