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Credit reporting vital to bad loan management–CBAN

Credit reporting vital to bad loan management–CBAN

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 Oyetunji Abioye

The Chairman, Credit Bureau Association of Nigeria, Mr. Tunde Popoola, says proper and timely credit reporting plays a significant role in managing or mitigating credit or operational risk in the economy as a whole.

He said the system was an enabler to robust risk management, noting that a productive credit system to the Medium, Small and Micro Enterprises should promote economic growth while enhancing the quality of life of people.

Popoola, who is the managing director/chief executive officer, CRC Credit Bureau, spoke at a quarterly risk roundtable organised by Risk Managers Association of Nigeria.

The event was themed, ‘The role of credit reporting in supporting institutions in risk management.’

Popoola said, “Once you have credit reporting system in any economy, it should assist in promoting robust risk management, especially around credit and operational risks. And these are the two major risks that financial institutions in particular are confronted with that lead to loss of revenue, assets and erosion of capital.

“If financial institutions can leverage the availability of credit reporting institutions, there’s no doubt that they would stem the tide of high level of non-performing loans and high level of fraud and operational losses.”

According to him, credit reporting system provides relevant information to financial institutions and allied services, adding that the idea of lending in the dark or doing transactions in the dark without adequate information will be addressed.

He stated that total the country’s loan value had grown from N7.7tn to N12.98tn between December 2008 and December 2015.

Popoola noted that NPLs which stood at 32.8 per cent as at December 2009, significantly dropped to 5.1 in December 2015, saying that the days of lending in the dark were over.

He said, “The idea of issuing of cheques against unfunded accounts or committing other manner of infractions is addressed by the availability of credit reporting. Credit reporting in an economy is represented by credit bureaus, which is what Nigeria has latched upon.

“So, we have all that it takes to address the issue of non-performing loans, to address the issue of losses from operations and so on. We also have the opportunity now to upscale access to credit for small businesses and consumers because those are the real propellers of an economy.”

 He explained further that in Nigeria, risk management played a centre role in the business process of financial institutions, adding that “this was not always so until we lived through the aftermath of a lack of effective risk management.”

The CRC Credit Bureau boss pointed out that failure of risk management process was one of the major factors that led to the global depression, noting that financial institutions were subject to a number of risks including credit, operational and legal risks.

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