CBK said delinking unregulated digital mobile lenders from CRBs was as a result of the public outcry over widespread misuse of the credit information sharing (CIS) mechanism. FILE PHOTO | NMG The Central Bank of Kenya (CBK) has barred unregulated digital mobile lenders from forwarding the names of loan defaulters to credit reference bureaus (CRBs) and stopped the blacklisting of borrowers owing less than Sh1,000.
CBK said delinking unregulated digital mobile lenders from CRBs was as a result of the public outcry over widespread misuse of the credit information sharing (CIS) mechanism.
This means only banks like KCB #ticker:KCB , Co-operative Bank and NCBA Group as well as micro financiers and deposit-taking saccos will now be allowed to blacklist defaulters with CRBs in the country. These are Metropol, TransUnion and Creditinfo International.
Firms such as Tala and Branch have been locked out at a time when the bulk of accounts negatively listed are linked to mobile digital borrowers. Banks will also be blocked from listing defaulters with unpaid loans of less than Sh1, 000, enhancing the borrowers’ chances of being able to borrow more.
“The withdrawal is in response to numerous public complaints over misuse of the CIS (credit information sharing) by unregulated digital and credit-only lenders, and particularly their poor responsiveness to customer complaints,” the regulator said in a statement yesterday.
“Thus, unregulated digital and credit-only lenders will no longer submit credit information on their borrowers to CRBs.”
This came as CBK governor Patrick Njoroge announced that the suspension of CRB listing for loans that were defaulted from April 1 and the relief from blacklisting would last for six months.
The CRB listing relief is part of a stimulus package announced on March 25 to cushion distressed businesses and families from the effects of the coronavirus pandemic, which has hit consumer demand and forced businesses to shed jobs and cut back their operations.
Under the new rules, only defaults above Sh1, 000 will be shared with CRBs with borrowers who had been blacklisted for lower amounts now required to be cleared unconditionally.
More than 3.2 million Kenyans had been negatively listed as loan defaulters in an economy where job cuts and near stagnant wages have left thousands of people in a debt trap. Data from the CRBs show that the accounts negatively listed had jumped from 2.7 million last year, a significant number of them linked to mobile digital borrowers of less than Sh1, 000
The CRBs are […]