New CRB draft regulations to control listing of borrowers on CRBs

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CRB listing
PHOTO/COURTESY

Financial institutions will be barred from listing borrowers who have defaulted on their loans on Credit Reference Bureaus (CRBs) without informing them first should draft regulations by the Central Bank of Kenya (CBK) be passed into law.

According to the proposed regulations, banks will need to give borrowers a thirty day notice before forwarding their names to CRBs over any cases of defaulting.

“An institution and a third party credit information provider shall notify the customer within one month before a loan becomes non-performing that the institution shall submit to a bureau the information on the loan immediately it becomes non-performing,” the draft rules read.

Should the draft regulations pass, traditional lenders, SACCOs and microfinance institutions will be required to offer the notice to the borrowers in form of writing and electronic means to inform them about the listing.

The planned move by the CBK is meant to protect borrowers and ensure their names are not listed on CRBs without their knowledge as has been the case in recent years.

According to a news report by the Business Daily, the recommended regulations will similarly entitle customers to inspect any information on their credit score with the option of having it corrected in case of irregularities and disputes.

In case of any irregularities and disputes, the CRB will be required to promptly inform the lender or SACCO so that the information does not continue being used before the difference is resolved.

“The bureau shall, within 14 days, conduct investigation—If the bureau does not complete its investigation within 21 days, it shall delete the disputed information as requested by the customer,” the draft states.

The Business Daily similarly reports that loan takers will be issued with a free copy of their credit report from each CRB or its agents at least once a year or within 30 days of receiving an adverse action notice which is a notice issued by a bank to a client conveying denial, cancellation or increase in any charges related to an existing or applied loan based on a CRB report.

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