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Credit reference bureaux adopt mobile systems

TransUnion Kenya, a credit rating agency has launched a new product that is expected to revolutionise the credit uptake in the country.

Dubbed Nipashe, the product is an SMS short code solution that allows individuals and institutions to easily access credit reports on their mobile phones, and follows the launch of a similar product by another credit reference bureau, Metropol, some months ago.

Online platforms have become increasingly popular in the Kenyan market where mobile phone penetration is as high as 90 per cent. The launch of Nipashe comes at a time when the latest Central Bank of Kenya banking sector report indicated that the value of gross non-performing loans (NPLs) increased by 5.7 per cent from Sh117.2 billion in March 2015 to Sh123.9 billion in June.

During the period, seven out of 11 economic sectors registered increases in NPLs, with the highest being trade, and transport, and communication which increased by 10.2 and 23.1 per cent.

TransUnion, CEO, Steve Kamau said the new product is expected give the consumers an edge while looking for credit. “Credit rating establishes a link between risk and return. It thus provides a yardstick against which to measure the risk inherent in any instrument.

Banks, SMEs, saccos, and utilities are expected to share their information with us,” he said. He said through the product, customers will be updated in case of any changes, including increment of Kenya Bankers Reference Rate which is sometimes factored into their loan repayment without information.

TransUnion director of product and strategy Rose Kinuthia said the risk perception of a common investor, in the absence of a credit rating system, largely depends on his familiarity with the names of the promoters or the collaborators.

Those applying for a loan or any form of credit must have a credit report first before the bank decides whether to give the loan.

According to CBK rules, no bank should give credit to any person with a defaulted loan. Kinuthia said although access to credit in the past from formal financial institutions was difficult for everyone, the use of credit reference bureau has made the process easier.

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