Parliament has been petitioned to amend the Banking Act to stop the use of credit reference bureaus.
Mr Peter Kimani Runo, the petitioner, also wants the National Assembly’s Finance, Planning and Trade committee to start proceedings to change any other relevant laws.
Kenya licensed its first CRB in 2010 in what was expected to lead to lower commercial lending rates by improving credit information availability in the banking sector.
But despite the presence of a credit information pool, commercial banks are yet to pass on the benefits, critics say. “The petitioner avers that credit reference bureaus have listed more than 700,000 individuals in their database as defaulters,” Mr Justin Muturi, the National Assembly Speaker told MPs while communicating the petition to the House.
Mr Runo claims that the listing of loan defaulters is causing a lot of anguish to the named individuals as they are unable to access financial facilities from local banks and other financial institutions.
SOARING COST OF LOANS
Prior to CRBs’ introduction, banks maintained that lack of credit reference information was a major contributing factor to soaring costs of loans due to incomplete information on borrowers.
“The petitioner prays that the National Assembly through the departmental committee on Finance, Planning and Trade initiates the process of amending the Banking Act and any other relevant laws to disband credit reference bureaus,” said Mr Muturi.
According to the Central Bank of Kenya, CRBs help lenders make faster and more accurate credit decisions.
The CRBs collect, manage and disseminate customer information to lenders.
Credit bureaus also assist in making loans accessible to more people, and helping lenders and businesses reduce risk and fraud.
Credit information sharing was expected to reduce risk premiums in loan pricing.#stollen from DN
As I said before banks are using these listings to punish both deserving and non deserving customers.Very few if any have benefited from having good reports[ATTACH=full]41296[/ATTACH]