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.

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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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