The Central Bank of Kenya (CBK) has initiated fresh steps to curb abuse of the Credit Reference Bureau (CRB) blacklists.
The banking regulator said it was in talks with banks and CRBs to review the credit information framework amid some persistent concerns by borrowers unfairly blocked from accessing loans.
“This relates largely to the use of adverse credit reports issued by credit reference bureaus, which are being used to deny borrowers credit,” the apex bank said.
“Further, CBK is working with CRBs to improve the quality of credit reports, and in particular, enhance the robustness of their credit scoring models and align them to best practices,” said CBK.
“In this context, banks are required to consider the credit score of a borrower in addition to the other factors in making a lending decision. This approach would allow borrowers and especially micro, small and medium-sized enterprises to access appropriately priced credit” CBK said.
The regulator however urged borrowers to honour their repayment obligations on their debt to avoid tussles with creditors.President William Ruto to reform the country’s credit market.
The President in September directed the CBK to abolish the blacklisting of borrowers and instead have a scoring method where defaulters will get a low grade instead of being shut out of the financial system.
Borrowers reported to one of Kenya’s three credit bureaus have their chances of accessing new credit severely limited as lenders tend to shun them altogether when they apply for loans, in what is known as a negative listing.
