Kenya shillings 1000 is the new minimum for CRB listing

The Central Bank of Kenya (CBK) has announced that Kenya shillings 1000 will be the new minimum threshold for negative credit information that lenders will submit to the Credit Reference Bureaus (CRB) for listing. Through a statement posted yesterday on their Twitter account, CBK said borrowers’ information on defaulted loans for less than Kenya shillings 1000 will not be accepted and all those who have been listed for these amounts will be delisted immediately.  

The Central Bank further announced that the digital lending applications have been barred from forwarding the names of their loan defaulters to the credit reference bureaus. CBK noted that there was a widespread outcry from the public resulting from how these unregulated mobile apps were misusing the credit information of their borrowers.

“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. Thus, unregulated digital and credit-only lenders will no longer submit credit information on their borrowers to CRBs,” read the statement from the CBK.  

Central Bank Governor Patrick Njoroge said that loans that have been performing but started defaulting from April 1 will be spared for a period of six months as part of the regulator’s relief meant to cushion Kenyans during the coronavirus pandemic.

For a very long time, mobile banking has bridged the gaps between financial crisis and Kenyans who have no access to the formal banking loans and who would have otherwise not own any bank account largely due to their financial capabilities. The digital lending apps’ ability to disperse the money requested in a very short time as 4 hours with no security at all has been made possible by the Safaricom’s M-PESA platform that allows money to be wired from the lending firms to the borrowers. It will be interesting to see how these apps will react to the new rule set by the Central Bank of Kenya, considering a significant number of those who have been listed at CRB are linked to digital mobile borrowing.  Survey data reveals that over six million Kenyans have borrowed at least one digital loan.

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