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CBK acts to rescue good borrowers from punitive bank rates

By - | November 23rd 2012

By John Oyuke

NAIROBI; KENYA: Good borrowers will soon have their information shared across the banking sector so as to easily access loans, if a new proposal by Central Bank on credit reference bureaus is adopted.

The banking sector regulator has revised the Credit Reference Bureaus (CRB) Regulations to facilitate full reporting and provide a legal framework for sharing of positive information by commercial banks.

CBK has invited the public to submit comments on the draft revised CRB Regulations by December 14, 2012.

The Banking (Credit Reference Bureau) Regulations, 2008 were operationalised in early 2009 to facilitate the licensing, regulation and supervision of Credit Reference Bureaus by the Central Bank of Kenya.

In particular, they allowed institutions licensed under the Banking Act to share negative credit information on bad borrowers.

Following rollout of credit information sharing (CIS) mechanism in July 2010, two credit reference bureaus have been licensed.

 To expand scope of CIS, the Finance Act, 2012, amended the Banking Act and the Microfinance Act to require all institutions licensed under the two statutes to share credit information through CRBs.

Global best practice

The CBK Act was also amended to require banks to share positive information on their customers through CRBs.

Following these developments, CBK has revised the CRB Regulations to harmonise CIS framework to enhance the robustness of the existing CIS mechanism and facilitate full file reporting by commercial banks.

In addition to providing a regulatory framework for the sharing of positive information, CBK said the revised CRB Regulations would address challenges witnessed so far during the period the laws have been in force.

“It will also incorporate developments that have taken place in Kenya, including harmonising Regulations with the requirements of the Constitution, 2010; and to adopt international best practices,” it said.

“As we endeavour to create an enabling environment for a more robust, stable, efficient and viable financial sector in Kenya, we would appreciate receiving proposals to enhance the review of the CRB Regulations,” added CBK.

Sharing of positive information will enable banks to tell a person’s total outstanding loans, allowing it to judge if it would be advisable to lend them more.

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