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Government: SACCOs to share credit information with CRBs

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SACCOs to share credit information

Underreporting of credit information leads to loss of tax revenue and a declining tax base which negatively impacts the government’s ability to meet its socioeconomic goals.

When Credit Reference Bureau authorities suspect that a financial institution is evading accountability,
they file lawsuits that often seek to bring the other party on track, which is a significant financial drain on the institution and the government.
The government of Kenya on January 10th enacted fresh plans compelling Savings and Credit Co-operative Societies (SACCOs) to share credit information with Credit Reference Bureaus (CRBs).

Credit Reference BUREAU

To keep the CRB evaders out of the purview, the government has once again released the SACCO Societies Amendment Bill which seeks to relook into SACCO operations. The National Assembly in October 2019 released passed the Bill as a means to harmonize the SACCO Societies Act of 2008 with the
Microfinance Act 2008 and the Banking Act. This alignment was aimed at bringing all credit information-sharing under one regulator.

The new provisions follow the Court of Appeal’s order that invalidated alongside 23 other lawsuits, the
SACCO Societies Amendment Bill of 2018. According to Majority leader Hon Amos Kimunya, the judgment in Civil Appeal No E084 of 2021 was based on the failure of the senate to participate in the process.

Appeal reaffirmed that the role of the Senate in legislation is mandatory, terming the lack of participation illegal. This means that the National Assembly was to work in liaison with the Senate for the Bill to be passed. However, the government on November 2021, republished the Bill and presented to the parliament in respect to the ruling to give room for
joint participation of the two houses.

An analysis of the government’s new provisions on the updated move throws light on some finer aspects
of the CRB Regulations 2013 where SACCO societies are required to seek the Central Bank of Kenya’s approval before releasing such data to the bureau.

Saccos

This is indeed a favorable move that will enable the SACCO societies to declare invaluable information
that the government may need for regulatory, as well as monitoring purposes. The SACCOs are mandated
to share with one another, positive credit histories while only sharing data with the bureau under the third
parties’ category that comes second to CBK.

The government now requires SACCOs not only to share positive information about their clientele with the
bureau but also negative. They shall share information on performing and non-performing loans as may be deemed appropriate by the authority,

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