Overview

In his inauguration speech on 13th September 2022, His Excellency The President indicated that his Government would initiate reforms to the operations of Credit Reference Bureaus (CRBs) in a bid to better credit access to the more than 19 million persons listed with the credit bureaus and to end the negative perceptions associated with CRBs. Instead, CRBs would assign credit scores to borrowers in a push to end the concept of ''blacklisting borrowers''.

Further to the Banking Sector Charter (BSC), 2019, the Central Bank of Kenya (CBK) has, in recent months, engaged banks on their risk-based credit pricing models to ensure that each borrower's credit risk is appropriately assessed and priced. This process is necessary in order to restore public confidence and enhance access to credit. Similarly, the CRB Regulations 2020, require lenders to entrench risk-based pricing in their lending models. In particular, Clauses 40(1) and 40(2) require institutions to consider a customer's credit score in appraising a customer's credit application while at the same time not relying on the credit score entirely in the pricing of a credit facility to a customer. More recently, CBK has directed CRBs to include a standard statement on every credit report indicating that a customer's credit score should not be used as the sole reason for lenders to decline loan applications.

These interventions point to the direction that the entire credit market will be expected to take. Lenders will need to assess the impact of these policy and regulatory directives from a competition and consumer centricity angle.

Workshop outcomes

By the end of the workshop, participants will:

1) Appreciate the business & regulatory environment;

2) Identify key elements of credit scoring;

3) Different types of data used in credit scoring;

4) Credit scoring methods and tools;

5) Consumer protection;

6) Opportunities, challenges & risks in credit scoring;

7) Integrating CRB scores with internal scores;

8) Examples of a loan pricing model practical application;