CBK STOPS DIGITAL MOBILE LENDERS FROM LISTING DEFAULTERS WITH CRBS

After numerous complaints from members of the public, the Central Bank of Kenya (CBK) has withdrawn the approvals granted to unregulated digital (mobile based) and credit only lenders as third party credit information providers to credit reference bureaus (CRBs).  Taking advantage of customers in desperate need of money, digital lenders have invaded the local market and they have been making a fortune by charging exorbitant interest rates. Customers are supposed to service the digital loans within a month and this has not been a walk in the park.  Consequently, digital mobile lenders have been employing punitive loan recovery methods, some of them being listing with CRBs.

After this announcement by CBK, only commercial banks, micro financiers and deposit taking saccos will now be listing defaulters with CRBs.  Nevertheless, CBK has also stepped in to stop the said lenders from listing defaulters whose outstanding loans are less than Kshs. 1,000 with CRBs.

The move is in line with the measures that were recently proposed by the government to cushion households and businesses from the adverse effects of the coronavirus pandemic.  Ordinarily, those listed with CRBs are unable to access credit from prospective lenders irrespective of the value of loan that is outstanding.