CBK Suspends More Than 337 Unregulated Digital Mobile Lenders

By Getrude Matayo

According to CRB’s latest guidelines released by CRB, more than 337 unregulated digital mobile lenders and microfinanciers have been barred from forwarding the names of loan defaulters to credit reference bureaus.

This means that only banks, deposit-taking SACCOs will be allowed to blacklist loan defaulters with CRBs. Firms such as Tala, Branch, Okash among others can no longer their borrowers’ credit information with the bureaus.

The regulator says the number of firms allowed to blacklist defaulters with the bureaus has dropped to 2,254 in September from 2,332 in May last year.

CRB said that the withdrawal was made in response to numerous complaints about misuse of the Customer Information Sharing CIS by the unregulated digital and credit-only lenders.

“The withdrawal is in response to numerous public complaints about misuse of the CIS (credit information sharing) by unregulated digital and credit-only lenders, and particularly their poor responsiveness to customer complaints”, CBK said in an earlier statement.

Under the new rules, only defaults above 1,000 shillings will be shared with CRBs. Borrowers who had been blacklisted for lower amounts are now required to be cleared unconditionally.

“With immediate effect, CBK has withdrawn issuance of approvals to mobile-based unregulated digital and credit-only lenders as third-party credit information providers to CRBs’, CBK said

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.

According to data from CRB, it shows that the accounts negatively listed had jumped from 2.7 million last year, s significant number of them linked to mobile digital borrowers of less than 1,000 shillings

Tens of unregulated microlenders have invested in Kenya’s credit market in response to the growth in demand for quick loans.

Their proliferation has saddled borrowers with high-interest rates, which rise up to 520 percent when annualized lending to amounting defaults and an ever-ballooning number of defaulters who have been adversely listed with CRBs

The market lender M-Shwari, Kenya’s first savings and loan product introduced by Safaricom and Commercial Bank of Africa in 2012, charges a facility fee of 7.5 percent on credit regardless of its duration, pushing its annualized loan rate to 395 percent.

The CBK announced the suspension of CRB listing for loans that were defaulted after April 1^st and the relief was to last for 6 months to September 30^th.