Credit bureaus herald era of financial discipline

What happens to a borrower who already has a bad track record?

There is an opportunity to rehabilitate yourself. If your information is reported showing the default rate, the only recourse is coming up with a new repayment plan, and once the debt is settled, the bureau will be notified. Therefore, your account will be positive; the credit history is not based on retrospect information but current update.

In case there is a dispute with the bank on an outstanding debt, what approach can a borrower take?

In the books of the banks, the original amount that was outstanding by the time you went to court, that is what would traditional be reported. But as a borrower you have the right to come to the bureau and tell of the dispute and if it is confirmed by the CRB, we wait for the court ruling.

How secure is the kind of information you have on millions of Kenyans in your data base?

Bureaus operate under a very strict confidentiality clause. You can imagine the power of the information we have here. The only person who has access is the data subject (borrower) or the institution you have approached for a facility. No bank can access that information unless you have initiated it, by being a customer. The law is very clear, on who should access the information, even internally in the bureau.

The information is not readily available; there is a certain procedure we must follow before disclosing the information. We must validate the source.

Other than financial institutions, who else can submit data to the bureau?

At this time, the law only permits licensed institutions such as banks but other sources who we call ‘third party’ can be identified and with the approval of the Central Bank we can include them for data submission. This is how institutions such as Helb, Nairobi Water and Sewerage Company came into the picture.

What about shylocks? Are they recognised as a formal business?

Shylocks can become formal business if they wanted; if they are registered and licensed.

The only problem with them is the punitive interest rate they impose, irrespective of CBK recommendations. Having said that, bureaus are only effective where there is an open referencing system where data submission is flowing from all sources of lenders, which will include microfinance institutions and saccos.

Looking at other African countries you have ventured into, what are some of the challenges you expect in Kenya?

The bureau initially has to deal with subscribing information and it is normally difficult if the information is available electronically.

Collection of data from scratch can prove to be a challenge before institutions are accustomed to it.