Commercial banks in the country have been advised to make use of the Credit Reference Act as a way of dealing with high cases of non-performing loans.
Reserve Bank of Malawi (RBM) Deputy Governor, Dr. Grant Kabango the banks have suffered a lot and are yet to recover from loses as they gave out loans to untrusted individuals and institutions.
“Through the act, banks will have a right of demanding a credit report or history from the borrower to ensure that the institution or the individual will manage to pay the loan,” Dr. Kabango told YFM in an interview.
Among others, Dr. Kabango has attributed the failure to pay back the loan by the borrower, to high interest rates in the part of the banks as well as lack of proper information for the borrower.
“In the past, many people and individuals have been failing to pay back the loan and the banks have been failing to trace them, this has been the case as the banks were not having details for the borrower and the act, is here to address that,” added Dr. Kabango.
He advised the commercial banks to reduce their lending rates to the non-performing loans by five percent by the end of the year so as to enable their customers to easily repay their loans.