This archive report was first published on 5 July 2019.
On July 5, 2019, the Central Bank of Kenya (CBK) issued a circular ordering banks to review their listing rules for credit reference bureaus (CRBs). This move aims to align mobile loans with normal loans, meaning individuals will only be considered defaulters after six months.
The CBK's decision comes after a technical group identified that one of the biggest problems with CRBs has been treating normal loans differently from mobile loans. This has led to a mass listing of individuals who have only failed to pay up by over 30 days.
According to a recent report by one of the CRBs, more than 2.7 million Kenyans have been blacklisted for defaulting on mobile loans. Of these, more than 400,000 people have been blacklisted for defaulting on loans of Sh200 and below.
CBK Director of Banking Supervision Gerald Nyaoma stated that the technical working group identified difficulties in applying the current data specification template to non-traditional forms of credit, such as digital loans.
The CBK has given all banks, microfinance, and credit reference bureaus three months to start using the new template. The template will classify non-performing loans as per prudential guidelines, which state that any loan past due more than 180 days shall be classified as doubtful.
Twelve firms of mobile lenders, under the umbrella of the Digital Lenders Association of Kenya, are trying to self-regulate. However, CBK Governor Dr. Patrick Njoroge has dismissed this effort, stating that there is no place for self-regulation due to the conflict of interest.
