Reward borrowers who pay back – CBK Governor

September 24, 2013
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Governor Professor Njuguna Ndung'u said the lenders should give incentives to borrowers who have scored positive points in their credit rating/FILE
Governor Professor Njuguna Ndung’u said the lenders should give incentives to borrowers who have scored positive points in their credit rating/FILE
NAIROBI, Kenya, Sep 24 – The Central Bank of Kenya (CBK) has called on commercial banks to ensure that information from the Credit Reference Bureaux is used to benefit customers seeking credit facilities.

Governor Professor Njuguna Ndung’u said the lenders should give incentives to borrowers who have scored positive points in their credit rating.

Speaking during the second Regional Credit Information Sharing Forum in Nairobi on Tuesday, Ndung’u regretted that banks had focused more on loan defaulters, which was discouraging Kenyans from seeking credit from the banks.

“We do know that customers are yet to fully benefit from the credit information sharing mechanism. We have to really play our part and ensure that credit allocation is sufficient,” Ndung’u urged.

By the end of last year, over 500,000 customers had been blacklisted by the two registered Credit Reference Bureaux for defaulting but some claimed that they had been erroneously listed despite having completed paying their loans.

Ndung’u however said that CBK was working on Credit Reference Bureau Regulations 2013 to allow smooth operation and ensure that both the banks and the customers benefit.

Credit Reference Bureaux came into effect in 2010 as a move to enhance access of loans by enabling banks to have confidence in the customers and hence lower costs of credit.

“The cost of credit still remains high to most borrowers. Credit information sharing alleviates the problems of asymmetric information by countering adverse selection, moral hazard and monopoly thus enabling lenders to make more informed decisions efficiently,” Ndung’u said.

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