This archive report was first published on 5 July 2019.
On July 5, 2019, the Central Bank of Kenya (CBK) released an order that has brought relief to over 2.7 million mobile loan defaulters in Kenya. The order commands lenders in Kenya not to list defaulters on the Credit Reference Bureaus (CRB) before six months.
This new order is expected to align mobile loans with normal bank loans in Kenya. It means that borrowers will only be considered to have defaulted after six months. The notice, however, does not touch on mobile lenders who operate out of the ambit of the regulator and online usury that involves an estimated 500 players.
CBK Director of Banking Supervision Gerald Nyaoma explained that the technical working group identified difficulties in applying the current data specification template to non-traditional forms of credit, such as digital loans.
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 Sh. 200 and below.
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, which is past due more than 180 days, shall be classified as doubtful.
