NBE freezes borrowers’ accounts with no TIN

Effective tomorrow December 26, the National Bank of Ethiopia (NBE) ordered all commercial banks to freeze accounts of borrowers who fail to submit their tax identification number (TIN), Capital learnt.
A senior NBE official on Tuesday told Capital that some customers of commercial banks remain hesitant to submit their TINs though it is requested by their banks.
“The National Bank runs a recently launched Credit Reference System which indentifies every borrower by their TIN. As we develop the system we want this data and we have requested the commercial banks to provide their borrowers’ TINs. However some customers of the bank have yet to comply,” the official explained.
Addressed to all presidents of commercial banks, NBE issued a letter instructing the banks to freeze accounts of borrowers who failed do submit their TINs as requested including through public broadcasts by the regulator.
“You are hereby instructed to block the current account(s) of those borrowers maintained in your bank up until they submit their TIN as required,” reads the letter signed by NBE’s vice governor Getahun Nana. The instruction that takes full effect tomorrow is not extended to condominium and personal loan borrowers, the letter explained.
Issued by the Ethiopian Revenue and Customs Authority (ERCA), each businessperson has a TIN. Now with NBE’s access of it, the state can have a clear picture of what the businessperson owes the banks in debt, their savings and what they pay the state in tax.
“Each business owner has a unique TIN number reinforced by finger prints. Even if the person has multiple businesses, they can have only one TIN. Because we assign only one TIN to the owner of a business regardless of how many they have, there is an ability to realize the person’s overall business operation and revenues; this is the whole point of assigning a unique TIN to every individual,” Ephrem Mekonnen, ERCA’s communication head, told Capital on Friday.
While NBE says the TIN it is soliciting from each borrower would be used as “a unique identifier” in its modern Credit Information System launched in August, some members of the business community appeared to be concerned with authorities further accessing their financial records.
NBE says the existence of credit bureaus and a credit reporting system enables financial institutions to make informed decisions.
“This has benefits both to the customer and the provider of the services. Making informed decisions is a fundamental issue creditors have to address as part of their routine loan provision. In the absence of information the risk is high,” NBE explains.
NBE’s latest modern credit records keeping scheme was financed by the World Bank. International Finance Corporation provided technical support and Compuscan Direct (CSD) did installation of the infrastructure and implementation of the system.