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Court Gives A Nod To Loaners To Blacklist Guarantors For Bad Loans

IMAGE/ COURTESY
IMAGE/ COURTESY

The high court has given a nod to banks and other financial service providers to blacklist guarantors with Credit Reference Bureaus (CRB) in case of bad loans.

The ruling was made in a case where one Obadiah Gitonga had sued Cooperative Bank for blacklisting him over a defaulted loan where he was the guarantor.

“The referral of any information to the CRB is a requirement of the law and the defendant as a financial institution is entitled to do the same, and as a result of their negligence in notifying the plaintiff of the outstanding balance, the court has held that the plaintiff will not pay any interest on the said sum,” ruled Lady Justice Grace Nzioka.

Read: Ksh14.8 Trillion Stolen Money Hidden In Offshore Accounts By Nefarious Tycoons

Mr Gitonga wanted to be delisted from CRB, a request the court denied saying that the bank acted within the precincts of the law.

“In the given circumstances, I find no basis for granting the orders sought,” ruled the court.

The court held that the relationship between Mr Micheu as a guarantor is founded in the law of guarantees, and that a guarantor assumes the responsibility of paying debt where the principal debtor fails.

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Written by Francis Muli

Senior reporter at Kahawa Tungu, Muli has a passion for human interest stories. He believes in unearthing societal rots that have been hidden from the public eye. He has also carved himself a niche in writing business stories. He has worked for various organisations including Kenya Television Service, Business Today among others. Follow him on Twitter @FmuliKE.

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