Credit Reference Bureaus, Loans Advancement and Recovery Performance by the Higher Education Loans Board of Kenya

Abstract

The Higher Education Loans Board (HELB) has been experiencing a problem of uncertainty when allocating funds and when recovering the loans from students who pursue higher education. This study sought to determine the effect of the Credit Reference Bureaus on loan advancement and recovery at the HELB, in Kenya. The study adopted a case study design. The study used an interview guide to collect data from the managers of departments at the HELB headquarters in Nairobi. The study found that the information obtained from the CRBs facilitates easy verification of the students loan details, certification of the guarantors, helps in assessing the ability of the loanees’ guarantors to pay in case the loanees defaults the loan, and saves time when processing loans. The use of CRBs services has been very beneficial to the HELB as it has increased efficiency while saving time consumed when processing loans. The CRB services have also been of great value to the HELB as it avails information which would otherwise be hard to get. This helps in loan processing and determination of the amount of funds to be award to students. The use of the CRB services facilitates has also led to increase of recovery figures, helps to identify hidden and unidentified loan defaulters and reduces credit risks associated with loan defaults at the HELB. The study recommended that the CRBs create awareness to other financial institutions on the importance of adoption of their services, in order to make consumers aware of their role in increasing price competitiveness of credit facilities by adopting good credit behaviour among consumers and lowering default rates on loans.