Saccos across the country will now share details of their members with Credit Reference Bureaus (CRB) after a Court of Appeal ruling.
The Court of Appeal on Friday, February 9, suspended a ruling the High Court delivered in September 2023 nullifying the Banking (Credit Reference Bureau) Regulations 2020.
A three-judge bench comprising Justices; Asike Makhandia, Mumbi Ngugi, and Mwaniki Gachoka, declared the ruling had been suspended pending hearing and determination of an appeal filed by the Central Bank of Kenya (CBK).
A photo of the Court Bench
The Judiciary of Kenya
“We accordingly allow the application and grant an order that the declaration issued by the High Court that the Banking (Credit Reference Bureau) Regulations 2020 are null and void for non-compliance with section 11 of the Statutory Instruments Act 2013 be and is hereby suspended pending the hearing and determination of the applicant’s appeal,” read part of the ruling.
CBK had appealed the High Court ruling arguing that if the regulations are nullified it would not be in a position to regulate CRBs and the financial system in the country as outlined in the Constitution.
Additionally, CBK noted that with the ruling three gaps emerged including; the minimum threshold for negative credit sharing information submitted to CRBs, granting CRB clearance to first-time job applicants seeking employment and onboarding Saccos and other financial services sector players into the Credit Information Sharing framework.
“The applicant seeks that pending the hearing and determination of its appeal, this Court issues an order to suspend the declaration issued by the High Court,” read part of the court ruling.
Meanwhile, per the 2020 regulations, Saccos were allowed to submit borrowers’ information to CRBs and receive credit reports directly. CBK introduced the new regulations to streamline the sector and protect Kenyans from predatory lenders.
Following the suspension, Kenyans listed for owing less than Ksh1,000 will not be blacklisted per the Credit Reference Bureau Regulations 2020. All lenders were directed not to share details of this category of Kenyans with CRBs.
Another reform introduced by the 2020 regulations was the free issuance of first-time CRB clearance certificates.
“This is particularly beneficial to Kenyan youth and graduates who are seeking employment,” reads part of the regulations.
Additionally, through the new regulations, CBK banned all unregulated digital and credit-only lenders from submitting credit information to CRBs.
CBK Governor Kamau Thugge addressing a Monetary Policy Committee (MPC) meeting on June 27, 2023.