Call for Poper Use of CIS in kenya.

I stand to be corrected, criticized and also trained further on this topic- CIS

CIS is Credit information sharing that came into the kenyan Financial services industry through a statute. It demands that all finsncial institutions and other creditors share any credit information to central and licensed Credit Reporting Bureaus(CRBs)- this is the performance of booked credit facilities that these institutions hold. Today this information should be shared daily.

The advantages of CIS

I say some of the advantages that has come along with the implementation of this process are;

• Fair competition among the players in financial services and generally credit business. This comes in as these institutions can learn of existing facilities that are defaulted by a prospective borrower. I know and understand that all defaults are not intentional but just by it existing, the new lender will always want that it is settled before they can proceed to lend.
• Educating consumers on the debt process especially bank loans, credit cards etc. there is struggle with the penetration of the CIS intentionin the market. Bankers and debt collectors at large have consistently strived to train their stressed clients on the need to continue paying for their debts despite being listed. For many people who have been throgh the complete credit circle (including default) now understand that being listed does not clear the debt and also the aging of the loans.
• The ease to access credit information. It is easier today to know the credit position of almost everyone if not all if it is a requirement for any kind of engagement between parties. This information though should help us know the person as opposed to using it as penal tool on them as is the case in many areas where it is sought, including recruitment.

What needs to change on CIS use.

Today it is almost an end game for anyone listed negatively with CRBs. Some people have taken it as a threatening tool when demanding for debts to be paid up. I once heard of a development where a landlord left a notice to his tenants that he would forward their names to CRB for rent arrears. If listing is going to be a threat then that should be changed. More education to the consumer is still needed in this area. We should also accept this fact that there is also a big number of exixting credits that are not listed.

What I would want changed regarding to our uptake of this requirement is mainly on how financial institutions, recruiters and the government still mainly when recruiting takes it when someone is negatively listed.We all will agree that even our countries credit scores change with different regimes and the fiscal policices for the day and how they affect the performance of the economy of the day. Changes in financial situation just like that of the economy are bound to occur either to the better or to the worse for anyone. It is just natural that way and that’s why today Moody’s will retain Kenya’s credit score and classify it at B2. We have also seen that just in a few months the national debt burden has been able to move to below KES. 6 trillion and it is bound to get better. With the same understanding for the nation we should approach our clients when their situations change to give them a negative listing. We should therefore ;

• Not deny anyone an employment opportunity due to negative listing,
• Refuse to lend to anyone, who can afford a new credit facility, due to historic credit listing.
• Refuse to buyoff existing listed facilities, when there is ability to repay the new contarct just because they are listed negatively and;
• lenders not refusing to lend due to adverse CRB listings with some demanding a clean report instead of pricing the loan based on the risk scores.

CIS should be able to guide us and not to be used as a penal tool. Banks have drawn down the appraisal exercise to CRB listings. Today before any appraisal is done the first check is the existing listings. The approach should instead shift to understanding the consumers’ needs, assessing the situation and according assistance that should possible erase the stress position for them. That way we will be working to better our people’s live and not making it harder.

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