The Bank of Ghana (BoG) licenced credit bureaus to commence operation some years ago. Their mandate is to make it easy for banks to identify borrowers and assess their credit-worthiness.

But six years down the line the practice of credit reporting remains an uncertain phenomenon because banks are being reluctant or unwilling to fully disclose information on clients which would help other banks to properly appraise credit applications.

The other is to do with enforcement of regulations guiding the use of credit reporting.

The Royal Bank is, therefore, calling on credit bureaus to embark on more awareness creation and education of bank executives to make it easier and faster to know the status of borrowers.

“There is a lack of education on the part of credit bureaus. However, to stimulate interest they should embark on awareness-creation and education. Again, the Bank of Ghana must ensure that regulations governing the use of credit reporting are properly and strictly enforced,” Robert Bentil, Managing Director of The Royal Bank said.

He added that The Royal Bank uses credit scoring in assessing borrowers; this helps to categorise customers into risk bands and assist the Bank to take credit decisions.

“Credit reporting is a good idea; it allows lending institutions to know the credit history of their potential customers. It serves as an additional tool for credit appraisal and also gives comfort for the lender since he is able to access information about the credit-worthiness of clients.”

Mr. Bentil added that relationship managers should undergo credit appraisal training in order that they can properly assess credit applications. “Banks should have a strong credit appraisal team to ensure rigorous credit appraisal and due diligence.

“Continuous training and education should be given to relationship managers so they can be updated on new trends in credit assessment. Effective loan monitoring systems should also be put in place.

“Lenders must ensure full disclosure of client details when reporting. They must also offer training to their Relationship Managers. This is to ensure that credit risk is secured. Borrowers must keep proper records and also employ competent staff to ensure that their business risk is secured.”

The Managing Director said, at the moment, reforms in the banking system to improve credit profiling may be too early; however, there is a need for continuous education and existing regulations to be strengthened and properly enforced.

The Royal Bank Limited is a wholly-owned Ghanaian bank incorporated on 15th July, 2011 and is duly licenced by the Bank of Ghana to operate universal banking services. It started operations on 10th December, 2012.