This archive report was first published on 22 April 2020.
On April 8, 2020, the Central Bank of Kenya (CBK) introduced new regulations for credit reference bureaus and the Credit Information Sharing (CIS) system, refreshing the framework in place since 2013.
The regulations provide for the licensing and supervision of CRBs by the CBK and a framework for the exchange of credit information between lenders and bureaus.
According to Dr. Njoroge, the Governor of the Central Bank of Kenya, the CIS aims to bridge the creditworthiness information gap by having credit priced according to borrowing history.
A good credit record, resulting from a good repayment history, demonstrates high creditworthiness and should lead to lower cost of credit.
However, the CIS has not worked as expected, with customers complaining about slow updating of CRB records after a debt is cleared, delays in correcting errors by lenders, and the cost of clearance reports for youth entering the job market.
The new regulations address these concerns by introducing a risk-based pricing approach that takes into account borrowers' credit reports in the pricing of loans.
CRBs are now required to generate a borrower's credit score for lenders to use to assess creditworthiness.
The key elements of the new regulations include:
- Setting a minimum of Sh1,000 for negative credit information that is submitted to CRBs by lenders, which will
