CBK Orders Millions of Kenyans to Be Removed From CRB Blacklist

  • CBK Governor Patrick Njoroge speaking during an interview on July 30, 2021.
    CBK Governor Patrick Njoroge speaking during an interview on July 30, 2021.
    The Standard
  • The Central Bank of Kenya (CBK) on Monday, November 8, announced the suspension of negative credit listing for borrowers of Ksh 5million and below for a period of 12 months.

    In a statement released by the CBK, it was stated that the directive took effect from October 1 and will end on September 30, 2022.

    The directive was made in line with an announcement by President Uhuru Kenyatta during the Mashujja day celebrations. The head of state noted that the move was one of the measures that he was taking to revamp the Kenyan economy from the effects of the global pandemic.

    File image of Kenyan banknotes held in a hand on January 25, 2020.
    File image of Kenyan banknotes held in a hand on January 25, 2020.
    Simon Kiragu
    Kenyans.co.ke

    "The agency announces the suspension for a period of twelve months of the negative listing credit information for borrowers with loans below Ksh5 million whose loans were previously performing but have become non-performing from October 1, 2020."

    "Further, CRBs will not include in any credit report, any negative credit information for loans of a customer less than Ksh5 million submitted to the CRB from October 1, 2020, to September 30, 2021," the statement read in part. 

    The CBK explained that the one-year suspension would give Kenyans the opportunity to grow the business, adding that the directive targets business enterprises in the country.

    "Further, a period of one year for the suspension is a reasonable period for the Micro, Small and Medium Enterprises(MSMEs) to restore their businesses," the agency stated.

    Over 14 million Kenyans have been blacklisted on Credit Reference Bureaus (CRBs) - severely affecting access to credit at a time when millions were losing jobs. 

    The Business Daily in February this year reported that 4,362,460 Kenyans were blacklisted as defaulters between August 2020 and January 2021. 

    The majority of the listed defaulters had loans of less than Ksh5 million and are largely expected to benefit from the new directive.

    CBK cautioned Kenyans who intend to take up loans below Ksh5 million stating that the directive would cause challenges during credit application.

    "In this regard, the credit could adversely impact the provision of credit by banks to the target group, as they will be unable to distinguish between the good and bad borrowers during the suspension period."

    “This could lead to rationing of credit as was evident during the period of interest rate caps from 2016 to 2019," the statement read in part.

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