Loan apps respond to CBK’s new regulations with a lengthy process or outright loan denial

After having dealt a blow with the new central bank of Kenya regulations, popular loan offering apps in Kenya are responding in kind. Borrowers are being outrightly being denied loans and those with existing loans are getting more than a dozen text messages or calls to pay up. Some of these texts are really troubling as some lenders are using the CRB threat or notifying borrowers their intent to forward details to debt collectors.

If you’ve been using these apps, there’s almost certain probability you won’t be issued another loan once you pay the current one despite their texts advising otherwise. The issuance of instant loans has ended, and the likes of Tala say they’re now focusing on small businesses instead. This follows the new regulations imposed by the Kenya’s financial regulator which denies unregulated lenders access to the CRB.

Without access to the credit reference bureaus, these lending apps are practically handicapped as most borrowers find the CRB blacklisting as their main motivation to pay up. Most financial institution in the country ranging from banks, saccos and credit societies rely on information from the refence bureaus to come up with a credit score before issuing them with loans.  

In response to the CBK, the Digital Lenders Association of Kenya (DLAK) has noted that the loan granting process will become lengthy consequently limiting the number of successful applications. The association has also indicated that mobile lenders will be forced to ask clients to send them bank and M-PESA statements in order to validate information on their source and level of income.

Since the latest directives from the CBK will consequently cut down on the number of individuals listed as defaulters, the process will become ambiguous in monitoring the creditworthiness of applicants as before.

DLAK chairman Robert Masinde said the process will now be longer as a result of these restrictions. Although they’ve come up with an automated integrated information system It’s quite a step back in terms of processing, he added.

Some of the loan apps that have been barred from accessing Credit Reference Bureaus include;