Millions of Kenyans with loans and who were scared of being listed on credit reference bureau (CRB) have a reason to smile after Central Bank of Kenya nullified listing of loan defaulters.
In the new directive to commercial banks, a borrower will only be considered to have defaulted a loan after six months and will not be listed on CRB before that.
The news from the CBK comes as music to more than 2.7 million Kenyans who are either listed on set to be listed on the CRB for “failing to pay loans on time.”
The directive given by CBK seeks to align mobile loans and normal loans, meaning in the near future, Kenyans will only be listed on the CRB only after defaulting a loan in six months.
Sadly, the directive that not affect digital lenders who have been blamed of mass listing Kenyans on credit reference bureaus after failing to pay a loan within 30 days.
A total of 2.7 million Kenyans are listed on CRB after failing to pay mobile loans with 500,000 of them have loans of 200 shillings and below.
Kenya has more than 500 digital lenders who give instant loans to Kenyan via their mobile loans, with 90 percent of borrowers accessing loans via mobile loan apps.
CBK has now given commercial banks, microfinance, and CBRs a period of three months to start using the new guidelines.
In the new guidelines, the template given will classify non-performing as per prudential guidelines which state that “any loan, which is past 180 days shall be classified as doubtful.”
Regulating Mobile Money Lenders
There have been calls for the Central Bank of Kenya (CBK) to regulate mobile money lenders who are charging exorbitant interest rates on desperate Kenyans.
Governor of the CBK, Dr. Patrick Njoroge has termed mobile lenders as “enhanced Shylocks who use digital platforms to prey on Kenyans with high-interest rates on their micro-loans.”