The number of non-bank firms registered with credit reference bureaus (CRBs) to start reporting credit status of clients increased by nearly half in 2018 compared with a year earlier, regulatory disclosures show.
Central Bank of Kenya (CBK) had approved 2,118 voluntary data providers as at December 2018 compared with 1,434 the year before.
This means additional 684 third party institutions registered with the CRBs last year compared with 637 in 2017 and 472 institutions in 2016.
“Most of the approved third party data sources are Savings and Credit Cooperative Societies (saccos), credit-only microfinance institutions, trade institutions, and insurance companies,” the CBK says in its Bank Supervision Annual Report 2018.
Unlike banks, microfinance banks and deposit-taking saccos, the third party data providers, are required to obtain consent from clients before sharing information on credit worthiness.
Since the launch of the credit referencing mechanism in August 2010, lenders had requested more than 32.965.6 million credit reports by end of December 2018.
“What we are seeing is that nearly all lenders and now even providers of goods and services on credit are coming the bureau-way. If you contemplate giving goods or services on credit, you are better off doing it under the CRB environment,” Sam Omukoko, managing director for Metropol CRB, said in an interview. “We see the numbers increasing by day. Mostly these are saccos and fintechs using apps to lend money.”
The CBK statistics further show reports accessed by individual borrowers were 529,171 — 53.13 percent of which were obtained in 2018 and 2017.
“Because banks are only using the reports for declining or accepting loans, individual involvement is very low. In fact, individuals only get involved when loan applications are declined,” Mr Omukoko said.
The CRBs are required to allow a bank customer to access his credit profile for free once a year with subsequent checks attracting a fee.