337 Loan Apps Blocked From Listing Defaulters on CRB

  • File image of Kenyan banknotes
    File image of Kenyan banknotes
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  • Central Bank of Kenya (CBK) has blocked more than 337 unregulated digital mobile lenders and micro financiers from forwarding the names of loan defaulters to Credit Reference Bureau (CRBs).

    The regulator noted that there have been public outcry over widespread misuse of the Credit Information Sharing (CIS) mechanism on mobile loan apps.

    According to a report released by CRB, the number of firms allowed to blacklist defaulters with the bureaus has dropped to 2,254 in September from 2,332 in 2019.

    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.

    Central Bank of Kenya (CBK) building in Nairobi.
    Central Bank of Kenya (CBK) building in Nairobi.
    Simon Kiragu
    Kenyans.co.ke

    The CRBs include Metropol, TransUnion, and Credit info International.

    Tala and Branch, which are among top players in the mobile digital lending market, affected by the directive, offer annualised interest rates of 152.4 percent and 132 percent.

    CBK requires that only defaults above Sh1,000 is shared with CRBs with those blacklisted for lower amounts to be cleared unconditionally.

    According to a report by CRB, more than 3.2 million Kenyans had been negatively listed as loan defaulters.

    The data further shows that accounts negatively listed with the bureau had jumped from 2.7 million last year with a significant number of them linked to mobile digital borrowers of less than Sh1,000.

    The high interest rates on the mobile loans, which rise up to 520 percent when annualised, has been the main reason for the ever ballooning number of defaulters who have been adversely listed with CRBs.

    In March, the regulator announced the suspension of CRB listing for loans that were defaulted after April 1.

    This was one of the government’s initiative to cushion distressed businesses and households from the effects of the coronavirus pandemic, which has hit the economy hard.

    Central Bank of Kenya Governor Patrick Njoroge addresses a news conference at the Central Bank's buildings on Tuesday, May 28, 2019.
    Central Bank of Kenya Governor Patrick Njoroge addresses a news conference at the Central Bank's buildings on Tuesday, May 28, 2019.
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