MASERU — The days of financial indiscipline and overspending could soon be over after parliament this week passed the Credit Reporting Bill 2011.
The Bill seeks to set up a credit bureau to be used by credit providers and the Central Bank of Lesotho (CBL).
The Bill that was read in parliament for the second and third time on Monday wants to set up a credit reporting system for Lesotho.
The bureau will provide creditors with individuals’ financial history including their past and current income, assets and debts and other matters within the scope of their “financial means, prospects and obligations”.
Included will also be a person’s details such as education, employment, career, professional and business history.
This means that consumers with bad credit records will find it difficult to access loans from banks.
“The law will also make provision for the licensing of private credit bureau operators, technical bureau services and incidental matters,” the Bill says.
Addressing parliament on Monday, chairperson of the Portfolio Committee on Economic and Development Cluster, Thabang Nyeoe, said the Bill was a welcome remedy because lack of creditors’ history and background hinder the advancement of businesses.
“Financial institutions are reluctant to lend money as they have no background and history of credit applicants,” Nyeoe, who is the leader of the Basotho Democratic National Party, said.
“Creditors will now be in a better position as they will be able to ascertain beyond reasonable doubt that an applicant does or doesn’t deserve credit.”
Nyeoe said the credit bureau will also help individuals looking to apply for loans to “keep track of their debt behaviour”.
“It will urge people to change their attitudes and pay their debts,” he said.
However, a member of the same committee, Butha-Buthe constituency MP, Motlohi Maliehe expressed concerns that there was no provision of protecting people’s data if the bureau ceases to operate.
“This law is silent on what will happen to the information when the bureau closes,” Maliehe said.
He added that stakeholders had called for the enactment of the National Identity Bill to speed up the establishment of the credit bureau.
The credit bureau will also provide creditors with a person’s credit history including applications for credit as well as “agreements to which a person is or has been a party in”.
Finance Minister Timothy Thabane said the bureau was important as it will help regulate the processes of lending money.
“All advanced countries have in place laws which regulate the manner in which credit is given,” Thahane said.
“It will also help in the protection of data, to avoid situations where such confidential information relating to our families is illegally published.”
“We don’t want a situation where I get credit today and tomorrow all that confidential information is all over the place. I therefore call for the Credit Reporting Bill 2011 to pass,” Thahane said.
Education Minister ‘Mamphono Khaketla said: “The proposed law will also help Basotho in that they will stop the practice of taking credit from loan sharks and protesting on the streets that government has shut down MKM.”
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