Nairobi — The new directive by the Central Bank of Kenya Governor Patrick Njoroge to bar unregulated digital lenders from forwarding the names of loan defaulters to credit reference bureaus (CRBs) will not affect defaulters listed earlier.
Digital lenders Association of Kenya Chief Executive Officer Robert Masinde told Capital Business that the move is effective this month and those listed will still be required to clear with the CRB.
"The directive will serve from now going forward and will not go back because the records are valid, but we see the statement imply that the move is permanent," said Masinde.
Unregulated players in the sector include Tala, Branch, Okolea, Stawika Capital, Zenka Finance and MyCredit among others. The directive however does not affect those regulated by the government, including KCB M-Pesa, Eazzy Loans and micro-financiers, among others. CBK Governor Patrick Njoroge on Tuesday stopped unlicensed digital lenders from sharing names of loan defaulters with the Credit Reference Bureaus. He said that the move is aimed at protecting distressed borrowers who have suffered from the wrath of these lenders, painted to be operating as shylocks. "With immediate effect, CBK has withdrawn the approvals granted to unregulated digital lenders and credit only lenders as third party information providers to CRB’s," reads Njoroge’s statement. The bank regulator has for some time now remained tough on the mushrooming digital lenders who he said should be manned like banks to protect borrowers. Different debtors have staged complaints before where some online lenders would share their information with third parties, when a loan is not cleared by the set deadlines while some critiqued some of the interest rate charges by the lenders.
He added that discussions have been underway since last year on how they are to be regulated by the Central Bank of Kenya.
"We met last year, and we had requested to seek an appointment early this year which has not happened, yet which is what we were waiting for," DLAK boss Masinde said during the exclusive interview with Capital business.
CBK remains the only body to approve of any lender allowed to share defaulters’ information on CRBs. This is after CRB’s receive an application from the lenders who in turn submit the names to CBK for approval.