By Kofi Ahovi
Hudsonprice Data Solution Limited, a new credit reference bureau, has received Bank of Ghana’s (BoG) approval to commence operations, BusinessWeek has gathered.
Hudsonprice becomes the second credit reference bureau in the country after XDS Data Ghana. Also expected to receive approval very soon is the Dun & Bradstreet Credit Bureau Limited.
BoG gave the approval to Hudsonprice Data a fortnight ago after it met all the necessary regulatory requirements. Both Hudsonprice Data Solution Ltd and Dun& Bradstreet were given a provisional license some few months back to enable them adequately prepare the grounds for operations.
The first credit reference bureau in Ghana and West Africa, XDS Data Ghana Limited, commenced operations two years ago.
A credit bureau is a repository of credit information, a neutral entity that collates consumer credit information by soliciting creditors such as banks and other lending institutions to contribute and share their credit information on consumers.
Practically, this means that the banks will have information on the credit worthiness of their clients before they advance loans to them. It further means that lenders that have registered with the bureau and supply data to it can make credit checks on loan applicants, as well as trace defaulters in the bureau’s data from the comfort of their offices.
Obtaining credit in most developing countries is a frustrating process that usually leads to wrong credit decision ¬making hence high non performing loans. Banks are therefore unwilling to extend credit without assurances that borrowers are creditworthy and that it will be possible for them to pay back.
The government signed into law the Credit Reporting Act, 2007 (Act 726) in April 2007 to facilitate the activities of reference bureaus. This law paved the way for licencing the first credit referencing bureau in the country. The Act facilitates smooth credit information-sharing among credit data providers.
The introduction of credit bureau operation is poised to change the situation where lenders find it difficult to gather demographic and credit information about loan applications. It would also enable banks, Non-Bank Financial Institution (NBFI) and other grantors to establish the creditworthiness of borrowers. This would lead to rewarding good borrowers with more favorable terms, while exposing bad borrowers.
The bureau will help lenders and merchants have access to more information on potential clients in order for them to make faster and more informed credit decisions. Borrowers on the other hand will also have the opportunity to develop good credit history that will enable them receive faster credit approvals without having to rely on collaterals and guarantees to access credit. Borrowers with good history can even negotiate better terms of lending.
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.
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