Can Saccos list you in CRB?
Defaulting on a Sacco loan might have more serious repercussions than anticipated, as these cooperative societies are now integrated into the credit-sharing system due to recent legal amendments. Creditinfo CRB, Metropol CRB, and Transunion CRB are the three credit reference bureaus (CRBs) overseeing this mechanism in Kenya.
Can Saccos list you in CRB?
Amendments to the Finance Act 2016 expanded the scope of entities that can refer defaulters to credit reference bureaus, encompassing power, water, and telecom companies. This legislative change aimed foster more responsible borrowing behavior by providing lenders, utility firms, and credit reference bureaus with the ability to share borrower information across the East African region.
The underlying motive is clear: to evaluate a borrower’s creditworthiness based on their payment history, thereby influencing the terms and conditions of loans issued. The move enhanced the credit information sharing system. Past instances of misusing the system or sharing outdated information have raised concerns among industry players.
Utility companies such as Kenya Power, water firms, mobile operators, and pay-TV service providers are also now part of the credit sharing landscape. Stakeholders viewed this inclusion as a game-changer, asserting that it will provide a more accurate depiction of prospective borrowers‘ creditworthiness.
Metropol Credit Reference Bureau Managing Director Sam Omukoko highlighted the potential benefits of including utility bills in credit reports. He noted that incorporating bills such as electricity in individuals’ names, rather than landlords, could significantly contribute to assessing creditworthiness.
Former Treasury Secretary Henry Rotich emphasized the positive impact of the credit information sharing (CIS) framework on Kenya’s economic landscape. The framework’s expansion, coupled with facilitative reforms, has contributed to improving the country’s ranking in the World Bank Ease of Doing Business indicators.
As the legal changes came into effect, Saccos express enthusiasm about their enhanced ability to gauge the creditworthiness of prospective borrowers. Nation Sacco Chairman Peter Munaita saw this development as a substantial boost for Saccos in evaluating borrowers.
Jared Getenga, Chief Executive of the Credit Information Sharing Association of Kenya, believes that cross-border information sharing and the exchange of information between Saccos and utility companies strengthens the credit sharing system.
With 184 licensed Saccos in Kenya, holding deposits totaling Sh205 billion and a loan book of Sh228 billion, positive information sharing by Saccos is poised to add pressure on lending institutions. This shift encouraged lenders to reward good borrowers instead of solely relying on CRB reports to blacklist defaulters.
Author: Andrew Walyaula
Andrew Walyaula is a seasoned multimedia journalist. waliaulaandrew0@gmail.com
