In recent times, there has been the proliferation of unsecured lending to borrowers with tens of unregulated microlenders invading Kenya’s credit market.
CBK and the National Treasury are working on regulations to tame predatory lending apps, senior officials have confirmed.
Speaking last Thursday, during the 5th edition of the Credit Information Sharing (CIS) Conference, the officials reiterated government’s commitment to root out the ‘shylock’ apps.
Deputy Governor of the Central Bank, Sheila Mbijiwe said that CBK will soon change laws to monitor the unregulated money lending apps. She added that current regulatory framework is limited to traditional financial institutions such as banks and saccos.
On his part, Senior adviser, Dr. Geoffrey Mwau said that the treasury is in the process of developing a national credit information sharing policy. He added that CIS financial literacy and public awareness will roll out soon.
Digital lending apps are notorious for high interest rates, harassment of defaulters, and issuing threats.
Therefore, a CIS system will allow financial institutions to justifiably divulge information about their customers without breaching their duty of confidentiality. In this case, credit referencing will help banks and digital lenders to lend to customers comfortably.
There is need to diversify a customer’s credit score to include data sources such as utilities, cable networks, insurance, and employment data. Moreover, a credit score based on frequency of payment of previous loans held by the borrower.
There are new technologies and trends in credit scoring such as biometrics, big data, social media, and psychometric tests.
Kenyanwallstreet talked to CIS Association of Kenya Jared Getenga. Listen here to get more insights into credit information sharing.LISTEN TO ARTICLE