The National Bank of Ethiopia ordered all commercial banks to freeze accounts of borrowers who have not submitted Tax Identification Numbers as of the 26th of December.
All commercial banks were instructed to freeze the current accounts of borrowers maintained in the bank until they present TIN as requested, by a letter from the National Bank addressed to all presidents of commercial banks.
The central bank required commercial banks to provide the TIN if their borrowers as part of the recently launched Credit Reference System said a senior NBE official. Some borrowers have failed to submit their TIN affecting the new system which identifies every borrower by their TIN he said.Tax Identification Numbers are unique to each business owner and are supported with finger print information allowing relevant authorities to get an overall view of an individuals or company’s business activities and revenue said Ephrem Mekonnen, Communications Head for the Ethiopian Revenue and Customs Authority.
The new Credit Reference System and the existence of credit bureaus allows financial institutions to have all necessary information for decision making claims the National Bank. The system is beneficial to financial institutions and their customers eliminating the high risks associated with uninformed decisions explained the central bank.
The new system does not apply to condominium and personal loan borrowers according to the letter issued by the National Bank.
The National Bank’s new initiative to modernize credit records was funded by the World Bank, with technical support provided by the International Finance Corporation and installation and infrastructure for the system implemented by Compuscan Direct.
Source: Capital
