Banks in Rwanda are happy with the introduction of a new digital system that will be used to auction off properties of loan defaulters
Officially launched on Wednesday, August 5, the government introduced the electronic auctioning system to reduce corruption that has been rampant in the auctioning process of loan defaulters' property.
The Executive Secretary of the Rwanda Bankers Association (RAB), Tony Francis Ntore told The New Times in a telephone interview that the launch of the Electronic Auctioning System has come at the right time and will go a long way in improving the service value chain between bankers and clients.
"We used to have people who are posing as potential buyers just to frustrate pricing. This system is going to weed out the people who were disorganising the whole process, especially now that they are required to put a down payment. It will save us a lot of time," he said.
To bid for a property with reference price equal to or more than five million Rwandan Francs (FRW 5,000,000), one has to submit a refundable bid security of five percent (5%) of the price.
The electronic auctioning system comes with other changes which seek to cut on the money and time lost as financial institutions pursue court authorisation to sell off the borrower's property to recoup their money when the latter defaults on his or her loan.
The launch of the Electronic Auctioning System took place in Kigali yesterday. / Dan Nsengiyumva
To reduce the bureaucracies and delays of court cases, that step has been eliminated as well since going forward, banks will not be required to go to court if the client fails to pay.
Instead, the institution will be required to file a request of authorisation from the Registrar General.
Commenting on this development, Ntore explained that this will ease the process by cutting all the red tape that has been costing banks money and time.
"This of course is good news. There are times when the process of going through courts was taking as long as three years but now, the bank and RDB will be on the same page," he said.
Launching the system, the Minister of Justice, Johnston Busingye said that at the time the Professional Bailiffs Association was born in 2001, Rwanda had only seven bailiffs.
He added that even though the number has since increased to 520 and another 2,566 non-professional bailiffs at the cell, sector and district levels joined in, this has not eased challenges like delays or illegal practices in executing enforcement orders.
"We are introducing this system as a long-term solution to fix such issues whether they are court or Registrar General ordered property auctions. This is of course in line with our country's vision to develop faster using technology," the Minister said.