The Central Bank of Kenya (CBK) has ordered the delisting of Kenyans who have defaulted their loans with less than Sh1,000 from Credit Reference Bureaus (CRBs).
This, according to CBK is following public outcry regarding blacklisting of people by mobile lenders that has seen at least 2.7 million Kenyans credited negatively.
Additionally, the circular indicates that people who will seek CRB clearance certificates for the first time will not be charged.
“A minimum threshold of Sh1,000 has now been set for negative credit information that is submitted to CRBs by lenders. Borrower’s information regarding non-performing loans of less than Sh1,000 will therefore not be submitted to CRBs, and borrowers that were previously “blacklisted” only for amounts less than Ksh.1,000 will be delisted,” reads the statement in part.
Further, it adds,” First-time CRB clearance certificates will be provided by CRBs at no charge. This is particularly beneficial to Kenyan youth and graduates who are seeking employment.”
SACCO societies have been included as authorized subscribers of Credit data to CRBs as they will now be required to submit borrowers’ information and receive credit reports directly from them.
“Consequently, loans that fall in arrears from April 1 to September 30, 2020, will not lead to the “blacklisting” of the borrower on the CRBs. This is one of the emergency measures that were announced on March 25, 2020, in light of the exceptional circumstances from the Coronavirus pandemic and aiming to shield borrowers from the adverse impact,” it reads.
On March 25, 2020, President Uhuru Kenyatta ordered the temporary suspension of the listing with CRB of any person, Micro, Small and Medium Enterprises (MSMES) and corporate entities whose loan account had fallen overdue or is in arrears, effective April 1, 2020.
According to the Head of State, this was aimed to relieve the burden caused by COVID-19 that has rendered several people jobless due to tough economic times.
According to online sources, the majority of Kenyans especially the youths and graduates have been blacklisted by mobile loan lenders due to defaulting. Unemployment among the youth has played a key role in this.
Some have been blacklisted for very low amounts such as Sh200. The circle has been reported to grow as most people take up loans to pay other existing loans.
Further, digital borrowers have initiated higher charges for small loans in that a person borrowing from as low as Sh200 ends up incurring higher costs and interests while making payments.
This is a huge relief to the majority of Kenyans who had suffered a blow due to negative listings by CRBs.