What you need to know:
Credit referencing prevents consumers from obtaining more loans than what they can afford.
Kampala- The outgoing chairman of Uganda Bankers’ Association and managing director of Citibank, Mr Ichinedu Ikwudinma, wants government to link the national ID system to the banking financial system through the Credit Reference Bureau (CRB).
Speaking to Daily Monitor recently in Kampala, Mr Ichinedu said feeding the national ID system into the financial system will be the most powerful means of financial inclusion.
“It will help increase peoples’ access to credit facilities, remove some of the issues that banks have with clients and enable better planning in terms of providing financial services,” he said.
The CRB, which uses biometric technology, is a safe means of identifying customers.
Here, borrowers are fingerprinted and, on the basis of their fingerprints, assigned a borrower number. This information is then included on a smart card, providing a background on various borrowers.
How financial system works
CRB works by collecting information on how people borrow and repay their debt obligations. It reduces the phenomena of multiplicity of borrowing by linking all debt to a common identifier and this assists to prevent consumers obtaining more loans than what they can afford.
He also called upon the people to make use of the Credit Reference Bureau consistently to expand the horizon so that information is more robust. This, he said, can be achieved by linking it to the national ID card system.
Mr Fabian Kasi, the managing director of Centenary Bank, and also incoming chairman of Uganda Bankers Association, said the banks have now launched a financial literacy campaign to educate them on how banks operate and the right channels to complain in case of any queries.
The campaign will sensitise the public about the different banking rates, charges and availability of credit facilities.
Mr Robert Mulondo, the general manager, Credit Reference Bureau, says it is possible to link the national ID system to the CRB if Bank of Uganda embraces it.
Kenya, for instance, has already linked the two systems and the national ID is the identifier of the client, he says.
The bureau has approximately 850,000 to 900,000 people registered in their system.
Currently, the banking sector uses a financial card system which has a number that uniquely identifies a person on the bureau system.