The Bank of Ghana last Friday began issuing licensing requirements for companies which will operate Credit Reference Bureaux in Ghana.
This comes as a huge relief to players in the financial sector who were hoping to see the quick implementation of the law which will then give them better information on the levels of indebtedness of borrowers before granting any loans.
Three companies including SDS Data have already applied to the Central Bank to run Credit Reference Bureaux in the country and indications are that the licences will be granted by the end of this month.
It will be recalled that CITY & BUSINESS GUIDE reported that the Central Bank was working around the clock to ensure the Credit Reporting Law was implemented soon.
The Credit Report Act, which became law in June, is supposed to provide legal and regulatory framework for credit reporting in Ghana to banks.
Among other benefits, the law would also help lenders assess credit worthiness. Furthermore, interest rates would then be based on risk-based pricing.
It will also protect both depositors and lenders, and as a result improve compliance of borrowers with their agreed contracts with the banks.
According to the Central Bank, no licence would be granted for the operation of a credit reference bureau, if a financial institution or a debt collection agency has 10 per cent or more of the voting rights in the proposed credit reference bureau.
Under section 1 of the Credit Reporting Act, 2007, Act 726, a credit reference bureau company is required to have a minimum paid-up capital of GH¢ 500,000.00 (¢5.0 billion).
In addition, a licence will be granted to any institution to carry on the business of credit reference bureau after the regulator is satisfied with the financial and operational resources to enable it function efficiently and perform its functions effectively in accordance with the act.
By Charles Nixon Yeboah & Felix Dela Klutse