By Morris Aron

The Central Bank Kenya (CBK) is set to announce the first licensed credit reference bureau soon.

This comes after a successful evaluation of four companies that applied to offer the services.

Credit experts say the development spells doom for serial loan defaulters, who normally access loans from banks, without providing history of their repayments

The Credit Reference Bureaus (CRB) will open up credit opportunities for those in the informal sector.

Among the top contenders include the Credit Reference Bureau, Group-Africa, which currently offers the service in 12 African countries, and a number of local and international firms.

ONE qualified

"The approval team is satisfied with one out of the four firms that applied to be licensed as CRBs in the country," said Ms Rose Detho director of bank supervision at CBK.

"The other three are yet to furnish us with the additional information we asked for."

A credit reference bureau is a company that collects information on individuals’ or institutions’ borrowing and paying habits, and supplies them to the financial institutions they intend to borrow from.

Such information is then used to assess their creditworthiness and ability to repay a loan in the process putting on notice serial loan defaulters, whose records can easily be accessed.

The information is also essential in determining the level of interest rates which is a representation of how risky an individual is against which a loan is issued based on their credit history.

"The new law will guide the system of credit information in the country, wider access to credit, and isolate serial loan defaulters," said Mr Samuel Omukoko, the managing director of Metropol East Africa a credit rating agency.

Experts say the development will make it easier for firms to access credit rating services. Currently, there are only two companies offering the services in the country—GCR and Metropol East Africa .

The licensing follows the coming into effect of The Banking (CRB Regulations) Act 2008 in February this year, after it was gazetted in June last year. "We are confident the legislation on CRB leaves no room for foul play," said Detho.