Why court reinstated regulation of CRBs
CBK says that the absence of CRB Regulations was hindering the discharge of its constitutional mandate
What you need to know:
- CBK had submitted that the absence of the regulations was hindering discharge of its constitutional mandate
- CBK moved to the Court of Appeal contending that the entire credit information sharing framework had been thrown into total disarray as the regulator cannot enforce or implement the rules.
The Court of Appeal has temporarily reinstated Credit Reference Bureau (CRB) Regulations, which were nullified by the High Court last year, handing the Central Bank of Kenya powers to supervise entities that help lenders to assess a borrower's creditworthiness.
The Banking (Credit Reference Bureau) Regulations 2020 were declared null and void by Justice Mugure Thande on August 28, for noncompliance with section 11 of the Statutory Instruments Act, on timelines.
CBK moved to the Court of Appeal contending that the entire credit information sharing framework had been thrown into total disarray as the regulator cannot enforce or implement the rules.
The court was informed that whereas the regulations were published by CBK on April 8, 2020, they were transmitted to the Clerk of the National Assembly on May 5, 2020. They ought to have been transmitted by April 14, 2020, petitioner Benjamin Bogongo argued.
High Court judge had rejected an excuse of Covid-19 pandemic, as submitted by CS Treasury for the cause of the delay.
A bench of three judges of the Court of Appeal, however, agreed with CBK and Treasury that the quashing of the regulations had left a huge vacuum in regulation of CRBs in Kenya.
CBK had submitted that the absence of the regulations was hindering discharge of its constitutional mandate, which requires it to maintain a stable and efficient banking and financial system in Kenya.
Justice Asike-Makhandia, Mumbi Ngugi and Mwaniki Gachoka ruled that the CBK and the general public would suffer irreparable harm in light of the lacuna that has been left by the nullification and the appeal, which has already been filed, would be rendered nugatory in the event that it succeeds.
