CENTRAL BANK OF KENYA
REMARKS
BY
PROF. NJUGUNA NDUNG’U
GOVERNOR
CENTRAL BANK OF KENYA
AT THE
PRESS BRIEFING ON THE ROLL OUT OF CREDIT INFORMATION
SHARING
Central Bank of Kenya, Nairobi
13th July 2010

Mr. Richard Etemesi, Chairman, Kenya Bankers Association;
Mr. John Wanyela, Executive Director, Kenya Bankers Association;
Mr. Wachira Ndege, Chief Executive, Credit Reference Bureau Africa
Ltd;
Members of the Media Fraternity;
Colleagues;
Ladies and Gentlemen:
1. Let me at the onset thank members of the media fraternity who have
accepted our invitation to attend this press briefing. The Central Bank of
Kenya (CBK) is pleased to announce the roll out of credit information
sharing for the banking sector. The CBK has accordingly this morning
issued a circular to all institutions licensed under the Banking Act notifying
them that the effective rollout date for the credit information sharing
mechanism shall be 31st July 2010. This implies that:-
• The first reporting date for non-performing loans and other information
sets to be submitted by banks shall be 31st July 2010.
• The information as at 31st July 2010 should be submitted to the licensed
Credit Reference Bureau by 10th August 2010.
• Thereafter the information will be provided and updated at the end of
each month.
2. As you will recall, the Banking (Credit Reference Bureau) Regulations, 2008
became operational on 2nd February 2009. CBK has since then licensed one
Credit Reference Bureau, CRB Africa, granted approval in principal to
Metropole CRB and is processing two other applications.
3. The rollout of the credit information sharing mechanism follows four pilot
runs conducted between banks and CRB Africa. The principal objectives of
the pilot runs conducted between February and June 2010 were to:-

• Confirm commercial banks capability to extract and submit data in the
specified format;
• Evaluate the suitability of the data specifications document jointly
developed by CBK, Kenya Bankers Association and CRB Africa.
4. The pilot runs have provided useful learning experiences for banks and the
Credit Reference Bureau that will facilitate the roll out. Banks and mortgage
finance companies will therefore be expected to submit the mandatory non
performing loan data as at 31st July 2010 to licensed CRBs by 10th August
2010. Institutions will thereafter be expected to submit to all licensed CRBs
updates on non performing loans and other information sets on a monthly
basis.
5. It should be noted that whereas the CRB regulations mandate the sharing of
non-performing loans information, they also provide for positive
information sharing. The full benefits of credit information sharing can only
be realized with the sharing of both positive and negative information. I am
therefore pleased to note that the Kenya Bankers Association is already
liaising with its member banks on modalities of sharing and building
information capital that includes both positive and negative information.
6. The roll out of credit information sharing marks a watershed in the
development of Kenya’s financial sector. Information asymmetry between
banks and borrowers has for long constrained innovation and financial
intermediation. This state of affairs has led to the front-loading of search
costs and a risk premium in the cost of credit. Undoubtedly this has led to
the high cost of credit that has constrained the expansion of businesses and
deterred access to credit by a significant proportion of Kenyans.

7. Credit information sharing will facilitate the building of information capital
that will guide the pricing of loans by financial institutions. Banks will at the
appraisal stage be able to price loans with a vastly enhanced information set
as compared to the current situation. Customers, armed with their credit
histories, will also be empowered to negotiate better terms for credit with
banks. This is definitely a win-win situation that will catalyse growth of credit
for investment and wealth creation pushing Kenya faster towards Vision
2030 aspirations of being a middle income country.
8. Credit information sharing will reduce the search costs incurred by banks in
pricing loans. This will in turn not only enhance access to credit but also
reduce the cost of doing business and boost Kenya’s competitiveness as the
Eastern Africa Financial Services Hub.
9. We anticipate that the benefits of credit information sharing will start
accruing from the middle of next month after the initial submissions. Banks
will be able to start accessing credit reports from mid August 2010 for loan
appraisals. Customers should also be able to start accessing their credit
reports at the same time. I therefore urge bank customers to liaise with their
banks and ensure that their account details are up to date. I also urge them
to contact their banks to explore modalities of sharing positive credit
information.
10. CBK will, in this roll out period, partner with KBA to sensitize the public on
the modalities and benefits of credit information sharing. The media will
play a key role in this campaign and let me take this opportunity to seek
your support as we roll out the sensitization campaign from today.
11. The roll out of credit information sharing for the banking sector is just the
first step. As you are aware, Kenyans also access credit from a whole host of
non-banks including, microfinance institutions, SACCOs, other financial

sector regulators and utility companies. It is therefore imperative that the
mechanism be extended to other non-bank credit providers.
12. Accordingly CBK in partnership with KBA and with the support of the
Financial Sector Deepening Trust Kenya set up the Kenya Credit
Information Sharing Initiative (KCISI) in August 2009. KCISI will work with
banks as credit information sharing is implemented and explore modalities
of extending credit information sharing beyond the banking sector.
13. It is important to underscore that Credit Reference Bureaus licensed by CBK
shall be subject to onsite and offsite surveillance by the Central Bank. The
Banking (Credit Reference Bureau), 2008 regulations stipulate activities the
bureaus can undertake, restrictions on use of customer information and
security and control measures. The CBK is empowered to take remedial
measures including revocation of license for violations of the regulations by
CRBs.
14. With regard to customer information protection, the Regulations place
emphasis on ity of information handled by CRBs and also
places stringent restrictions on the use and application of such information.
Banks and CRBs cannot share information with unauthorised third parties.
The regulations provide for stringent penalties of up to Shs.500,000 for
such breaches by CRBs. Banks on the other hand will be subject to
penalties of up to Kshs.1 million and other remedial measures available
under the Banking Act for such breaches.
15. In closing, let me underscore CBK’s commitment to working with the
government and other players to promote a stable, inclusive and efficient
financial system.
We will now take your questions.
Thank You