Banks should practice smart and selective lending to avoid crippling the sector as a result of huge bad loans. "Lending is one of the ways banks make money, but you don’t have to dish out money because you must lend. This could lead to catastrophic consequences for banking sector,” Amb. Claver Gatete, the Minister of Finance and Economic Planning, noted. He was recently speaking during a symposium on "From Evidence to Policy; A Decision Science” organised by the governemnt and the Abdul Latif Jameel Poverty Action Lab (J-PAL) from the Massachusetts Institute of Technology (MIT) in Kigali.Gatete also advised borrowers to always first understand the various bank loan products and evaluate their needs before they apply for credit. This, he said, builds trust between the lender and the borrower and guards against wastage. "Many people apply for loans when they don’t even know what they will use it for. You need to have information about loan products and know why you need that money. Remember, when money is in your hands, it is hard to keep it or use it productively if you don’t have a clear plan. Therefore, it’s important that banks take precautions and use evidence of one’s financing needs before they give them money,” he said.Gatete acknowledged the importance of extending financial incentives to the different sectors of the economy, but cautioned stakeholders to do it based on concrete data of one’s funding needs. John Rwagomba, the National Bank of Rwanda governor, noted that creditworthiness was still a big challenge to the banking sector because of the historic legacy of handouts and subsidies. He said because of this wrong mentality, some borrowers treat loans as bursaries instead of credit that comes with obligations and responsibilities. "People don’t want to pay back loans. This is the reason many banks will hesitate to lend,” Rwagomba said.Meanwhile, Innocent Bulindi, the Business Development Fund chief executive officer, has said there is a need to find alternative means of securing loans to address the challenge of collateral that he said increases lending rates. "If 40 per cent of the households that own cattle were, for example,  allowed to use them as collateral, this will more than double the number of people legible to borrow. In the long-run, lending charges will go down,” he argued. He, however, noted that the problem was convincing lenders to accept the alternative forms of collateral.