This archive report was first published on 5 July 2019.
The Central Bank of Kenya has taken a significant step to protect borrowers against financial lending institutions. In a circular sent to all lenders, the bank regulator ordered a review of their CRB listing rules.
According to the notice, the current rules have been deemed unhealthy, leading to the nullification of listing loan defaulters before six months after borrowing date.
CBK Governor Patrick Njoroge has been calling for regulations to curb the rise of mobile money apps, particularly on customers' data privacy. The regulator has given financial institutions until September 2019 to implement the new changes.
Under the new rules, mobile loans will be treated as normal loans, giving borrowers a level playing field. However, the notice remains silent on the future of digital money lending firms, with the 12 main mobile applications currently self-regulating under the Digital Lenders Association of Kenya.
CBK has proposed a raft of measures in its 2019 regulations to protect borrowers against financial lending institutions. The proposal includes informing defaulters through writing of their intention to report them to CRB for listing, giving them a 30-day notice.
Following the mushrooming of mobile loan applications, there have been cases of Kenyans finding their names on the bad CRB book or receiving calls from the loaners demanding payment they know nothing about.
