Digital lenders have been high on their galloping horse in the name of self-regulation, squeezing the financial life out of middle and low-income earners in the country and punishing them severely for contravening with their terms and conditions. Not until the Central Bank stepped in to save the day.
In a new circular issued by the Central Bank of Kenya, mobile loan defaulters will only be blacklisted by the Credit Reference Bureau after six months of non-payment have elapsed. This follows a study by CBK that revealed that Credit Reference Bureaus handled bank loans differently from online loans that resulted in most digital borrowers the named in CRB list of defaulters.
“Among the challenges identified by the technical working group were the difficulties in applying the current data specification template to no traditional forms of credit such as digital loans,” said CBK Director of Banking Supervision Gerald Nyaoma in the circular.
Over 2.7 million Kenyans have been blacklisted for defaulting on mobile loans if a recent report by one of the CRBs is anything to go by. Among the blacklisted, more than 400,000 have defaulted on loans of Sh200 and below hence a mass listing of individuals who have only failed to pay up by over 30 days.
CBK has now given all banks, microfinance, and credit reference bureaus three months to start using the new template. The financial institutions will have to forward customers’ information to CRBs on a daily basis to ensure the information is up to date and those who have resumed servicing their facilities are not listed as defaulters. Also, the reporting template has been standardised so that analysis of data by the three licensed CRBs is at per to improve data acceptance rates.