Regulatory Alerts2016-08-11
Central Bank Circular No 3 of 2016 - Submission of Credit Information to Licensed Credit Reference Bureaus
The Kenyan banking sector has made progress in implementing a credit information sharing mechanism (CIS). This system assists banks in identifying high-risk customers and recovering previously unrecoverable debts, promoting the industry's stability and enhancing borrower culture. However, there are concerns about some institutions not submitting accurate and complete data to credit reference bureaus, failing to inform customers about their listing, and using it as a blacklist mechanism rather than a risk management tool. The Central Bank has issued a circular reminding banks of their obligations regarding exchanging information with licensed credit reference bureaus. The purpose is to ensure compliance with the provisions of the Credit Reference Bureau Regulations 2013. This includes submitting accurate data, notifying customers about the submission, and adhering to permissible grounds for adverse listing. Failure to comply with these requirements may result in enforcement action under the Banking Act, Microfinance Act, and Credit Reference Bureau Regulations.