NAIROBI, Kenya Jul 13- Banks and mortgage companies have until the 10th of next month to submit credit reports on their customers to the Credit Reference Bureau.
This follows the operationalisation of the credit reference bureau regulations of 2008, which allows banks to share information collated as at July 31 with each other to determine their customers’ creditworthiness.
Central Bank of Kenya Governor Professor Njuguna Ndung’u says he anticipates that the benefits of the credit information sharing will start to be felt from mid next month.
“The standard format is that we want to come up with information that can allow decision making, allow processing of loans and can also allow ease of doing business. The cost of doing business for us is a very important aspect that we want to minimise. The roll out of credit information sharing marks a watershed in the development of Kenya’s financial sector,” he said
Prof Ndung’u urged customers to liaise with their banks and ensure their account details are up to date and that the institutions share positive information about them.
The Chairman of the Kenya Bankers Association Richard Etemesi said with credit histories, customers will be empowered to negotiate better terms for credit which will in turn catalyse the growth of investments and wealth creation.
“Many Kenyans will recall the days when the banking industry was riddled with record levels of bad debts. In certain circumstances, this was the result of poor lending practices, but in other it was attributed to the lack of transparency in the credit market. Some borrowers too advantage of information asymmetry to camouflage their intentions of creating bad debts across the sector. KBA are preparing for early adoption of positive data sharing, and will soon unveil a roadmap for expansion of this process to include information from other lenders,” he said.
He further went on to appeal requesting lenders to share positive data.
Banks and CRB’s (Credit Referencing Bureaus) cannot share confidential information with third parties. The regulations in place provide for stringent penalties of up to Sh1 million.
Credit referencing is already established in South Africa, Nigeria, Egypt, and Zambia.
The rollout of credit information sharing in the banking sector is a culmination of efforts by the Kenyan government, Central Bank of Kenya, Kenya Bankers Association and other players.