Credit information sharing lands banks a new suit

Kenya’s credit referencing crisis has deepened with the filing of yet another suit by a consumer alleging wrongful blacklisting and subsequent denial of a loan.

Businessman Daniel Gachanja Githaiga has sued Credit Reference Bureau Africa (CRB-Africa) over his inclusion in the list of bad borrowers based on inaccurate and forged information.

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The suit, filed at Nairobi’s Milimani Commercial Courts, marks an escalation in what is turning out to be a legal land mine for banks that had welcomed credit referencing as a means of weeding out bad borrowers from the loans market.

Hearing of the suit begins on October 5 and will see Mr Githaiga face up to CRB-Africa, CFC Stanbic and an alleged fraudster, Joshua Njenga, before High Court judge Eric Ogola.

Mr Githaiga is accusing CRB-Africa — a Central Bank of Kenya-licensed credit reference bureau — of advising Equity Bank to deny him a Sh10 million loan because of his alleged failure to service an outstanding debt with CFC Stanbic Bank.

Mr Githaiga says in court papers that he approached Equity in July last year for credit to expand his business and that the bank agreed to his request but later retracted the offer, saying he had unpaid loans with CFC Stanbic Bank.

Upon investigating, the businessman established that it was CRB-Africa that had provided Equity Bank with the information, leading to cancellation of an earlier agreement.

He accuses CRB-Africa of passing the negative information to Equity without his knowledge, leading to the continued spread of falsehoods about him and his financial status.

Mr Githaiga says allegations that he has an outstanding loan with CFC Stanbic are false and unfounded because he has never operated a loan account with the bank.

Court papers indicate that investigations had revealed that Mr Njenga had fraudulently acquired Mr Githaiga’s personal data and forged his signature on several documents to obtain a loan from CFC Stanbic, which he used to buy a motor vehicle in Mr Githaiga’s name without his knowledge or consent.

Mr Githaiga is accusing CFC Stanbic of failing to make the necessary enquiries or investigations to authenticate the documents presented to them before releasing the funds to Mr Njenga.

He terms the defendant’s actions as reckless and negligent, saying CRB-Africa and CFC Stanbic owed him a duty of care to establish and verify the facts.

“CRB-Africa and the bank failed to carry out due diligence before giving false and damning information about my credit worthiness to third parties without my knowledge,” Mr Githaiga says, adding that he has been listed as a defaulter based on a forgery.

He is seeking court orders compelling CRB-Africa to retract any statements issued to all banks injuring his character.