CBK licenses third credit bureau

06 May 2015 | by
CBK licenses third credit bureau

The Central Bank of Kenya (CBK) has granted a license to Credit info Credit Reference Bureau Kenya Limited to offer credit information sharing services in Kenya. Credit info Credit Reference Bureau (CRB) Kenya Limited becomes the third credit reference bureau to be licensed in Kenya after Credit Reference Bureau Africa Limited and Metropol Credit Reference Bureau Limited which were licensed in February 2010 and April 2011 respectively.

Credit info CRB Kenya Limited is majorly owned by Credit info International GmbH, headquartered in Wiesbaden, Germany. It has credit information sharing operations in fifteen other countries including Lithuania, Latvia, Romania, Slovakia, Czech Republic, Malta, Georgia, Kazakhstan, Ukraine, Iceland, Jamaica, Cape Verde, Tanzania and Guyana. Creditinfo International GmbH offers credit information services as well as customer support in risk management.

In Kenya, the establishment of credit reference bureaus is governed by the Credit Reference Bureau Regulations, 2013. The Regulations, issued under the Banking Act and Microfinance Act (2006), empower the Central Bank of Kenya to license and supervise credit reference bureaus (CRBs) in Kenya. CRBs in Kenya are authorized to receive credit information from institutions licensed under the Banking Act and Microfinance Act (2006) as well as other approved third party data sources.

Credit information sharing in Kenya’s banking sector was rolled out in July 2010. Commercial banks then commenced submitting negative credit information on their borrowers to the licensed credit reference bureau in August 2010. Between August 2010 and January 2014 commercial banks were mandated to submit only negative credit information through the licensed CRBs. In 2013, the Credit Reference Bureau Regulations were amended to allow all commercial banks and microfinance banks to submit full file credit information (both positive and negative information) to the licensed CRBs effective 28th February 2014. A credit reference bureau receives, collates, compiles and disseminates to authorized users, information on borrowers’ credit histories from approved data sources.

Since August 2010 to 31st  March 2015, commercial banks and microfinance banks have accessed 5,609,725 credit reports whereas individual customers have accessed 96,245 credit reports. Under the Credit Reference Bureau Regulations, 2013, individuals are entitled to one free personal credit report per year from any licensed credit reference bureau. Enhanced services are accessible on commercial terms.

 Credit information sharing mechanism is beneficial to borrowers, lenders and the economy. To lenders, credit information sharing reduces information asymmetry between lenders and prospective borrowers which empowers lenders in their assessment and determination of credit requests. Borrowers, on the other hand, could use their good credit histories to build information capital and negotiate favorable terms of credit, thereby lowering their borrowing costs and enhancing their borrowing capacity. To the economy at large, increased commercial lending boosts economic activity.

The entry of more credit reference bureaus into the Kenyan market will raise the level of competition in credit referencing and avail more diversified products which CBK believes will culminate in reduced cost of credit, more efficient screening of prospective borrowers and pricing of credit risks.

An effective credit information sharing mechanism enhances access to credit nationwide, a key prerequisite for Kenya’s economic development as envisaged in the country’s development blueprint, Vision 2030. Accordingly, CBK will continue supporting the Government and partnering with market players to strengthen the credit information sharing mechanism in Kenya. 

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