Reprieve for mobile loan defaulters as CBK blocks lenders from CRB listing

Patrick Njoroge
Central Bank of Kenya Governor Patrick Njoroge. PHOTO | FILE

Over 337 unregulated digital mobile lenders and micro-financiers have been blocked form forwarding the names of loan defaulters to credit reference bureaus (CRBs).

Central Bank of Kenya (CBK) said that the number of companies allowed to blacklist loan defaulters has decreased to 2,254 in September from 2,332 in May 2019.

The decrease is linked to the CBK directive delinking unregulated digital money lenders from CRBs after public outcry over widespread misuse of the credit information-sharing mechanism.

Companies such as Tala and Branch were locked out at a time when the bulk of accounts negatively listed with CRBs are linked to digital borrowers.

CRBs include Metropol, TransUnion, and Creditinfo International.

“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 CBK said in an earlier statement.

In the new regulations, only defaults above Sh1,000 will be shared with CRBs.

Borrowers who had been blacklisted for lower amounts are now required to be cleared unconditionally.

Over 3.2 million Kenyans were negatively listed as loan defaulters amid job cuts and reduced earnings caused by the Covid-19 pandemic impact on the Kenyan economy.

CRB data revealed that the number of accounts jumped from 2.7 million in 2019 with the majority of them having borrowed less than Sh1,000.

By Linda Koskey for K24

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