Banking Circular No 1 of 2014 - Rollout of Full File Credit Information Sharing

BANKI KUU YA KENYA Haile Selassie Avenue CENTRAL BANK OF KENYA P. O. Box 60000 - 00200 Nairobi, Kenya Telephone: 2860000, Fax: 340192 BANKING CIRCULAR NO. 1 OF 2014 TO CHIEF EXECUTIVES OF COMMERCIAL BANKS, MORTGAGE FINANCE COMPANIES AND MICROFINANCE BANKS ROLLOUT OF THE FULL FILE CREDIT INFORMATION SHARING MECHANISM FOR COMMERCIAL BANKS AND MICROFINANCE BANKS On 17th January 2014, the Cabinet Secretary, National Treasury published in the Kenya Gazette the Credit Reference Bureau Regulations, 2013. The gazettement of the Regulations follows the amendment of the Banking Act and Microfinance Act through the Finance Act, 2012, in which all institutions licensed under the two statutes are now required to share credit information through licensed credit reference bureaus (CRBs). The Central Bank of Kenya Act was also amended to require banks to share positive information on their customers through CRBs. The objective of these amendments was to harmonise the credit information sharing (CIS) framework in order to enhance the robustness of the existing CIS mechanism and to facilitate full file reporting by commercial banks and microfinance banks. Pursuant to the amendments to the two statutes, the Central Bank revised the Banking (Credit Reference Bureau) Regulations, 2008 to accommodate the revised legal framework on CIS. The Credit Reference Bureau Regulations, 2013 are a culmination of this review exercise.

Following the amendments to the law, Central Bank of Kenya (CBK) together with the Kenya Credit Information Sharing Initiative (KCISI) undertook the revision of the Data Specifications Document and Data Standards Manual in order to facilitate sharing of full file credit information as well as to incorporate Microfinance Banks into the mechanism. In addition, challenges currently being witnessed by banks in the submission of data to the CRBs were also addressed in the review of the template. This has culminated into the new version 3.1 of the Data Specifications Template which has been tested by both Banks and Microfinance Banks in preparation for going live. In this regard, Central Bank of Kenya has scheduled the 28th February 2014 as the commencement date for full file reporting among Banks, Microfinance Banks and Credit Reference Bureaus (CRBs).

The purpose of this Circular, therefore is to:

1. Formally bring into operation full file credit information sharing mechanism for institutions licensed under the Banking Act and the Microfinance Āct effective, 28th February 2014.

2. Inform you that effective 28th February 2014; all Commercial Banks and Microfinance Banks shall be required to submit to all licensed CRBs, full file credit information. The information should be submitted to the licensed CRBs not later than 10th March 2014 and thereafter incremental data shall be submitted on a monthly basis on or before the 10th day of each succeeding month.

3. Require all Banks and Microfinance Banks to submit customer information to the CRBs using the released Data Specification Template version 3.1, a copy of which is the Central Bank of Kenya website currently available on at http://www.centralbank.go.ke.

4. Inform you that failure to comply with the reporting requirements or any other provision of the CRB Regulations will attract remedial action as specified under the Banking Act, Microfinance Act and the Credit Reference Bureau Regulations, 2013.

Maty

MATU MUGO ASSISTANT DIRECTOR, BANK SUPERVISION 18th February 2014 Cc: Mr. Habil Olaka Chief Executive Officer, Kenya Bankers Association, Transnational Plaza, NAIROBI.

Mr. Benjamin Nkungi Chief Executive Officer, Association of Microfinance Institutions, Methodist Ministries Centre, NAIROBI. Mr. Wachira Ndege Chief Executive Officer Credit Reference Bureau Africa Limited t/a TransUnion P. O. Box 46406 - 00100 NAIROBI Mr. Sam Omukoko, Managing Director, Metropol Credit Reference Bureau Limited, P.O. Box 35331-00200, NAIROBI.