Home Business The central bank of Kenya denies unregulated loan apps...

The central bank of Kenya denies unregulated loan apps access to credit reference bureau

In a gazette notice regarding new regulations on the credit reference bureaus, the central bank of Kenya has effectively denied popular loan apps access and thereby handicapping their ability to report loan defaulters. Kenyans have suffered immensely on these apps mainly found on the Google’s play store where a small amount of loan such as less than Ksh 1,000 could have them blacklisted affecting their credit score.  

In addition, most have been known to charge unscrupulous amounts in the name of daily interest just after the loan period expires. This has really weighed most Kenyans down especially during this difficult period of Covid-19 pandemic. These loan apps have become so popular on android phones, currently not available on iPhones due to Apple’s strict nature on privacy. Users could easily secure a loan probably repayable after just 15 days failure to which they’d be forwarded to reference bureaus or attract stiff interests each day their loan remained unpaid.

The banking sector regulator provided guidelines through which licensing and supervision of Credit Reference Bureaus (CRBs) is done. In addition, these regulations provide a framework for the exchange of borrowers’ credit information between commercial banks, microfinance banks, Savings and Credit Societies (SACCOs), other credit information providers approved by CBK, and CRBs.

According to the CBK, these regulations have been born from a consultative process that started in 2018, and are intended to strengthen Kenya’s Credit Information Sharing System (CIS) that has been operational since 2010. In particular, they seek to enhance consumer protection for borrowers, expand the sources of information and ensure the sustainability of the CIS as a key tool to bridge the information gap about the borrower’s creditworthiness.

Main reforms introduced by these CRB Regulations include;

  • To be listed in a reference bureau, a borrower must have borrowed a minimum threshold of Ksh.1,000. Consequently, borrower’s information regarding non-performing loans of less than Ksh.1,000 will therefore not be submitted to CRBs, and borrowers that were previously “blacklisted” only for amounts less than Ksh.1,000 will be “delisted.”
  • Secondly, first-time CRB clearance certificates will be provided by CRBs at no charge. This is particularly beneficial to Kenyan youth and graduates who are seeking employment.
  • SACCO societies regulated by the Sacco Societies Regulatory Authority (SASRA) have now been included as authorized subscribers of credit data to CRBs. These SACCOs will now submit borrowers’ information to CRBs and also receive credit reports directly from them.

On top of the above regulations;

  • The central bank of Kenya has withdrawn approvals granted to unregulated digital – mobile based as third party credit information providers to CRB. This according to CBK is after several complaints from the public over misuse of credit information by digital and credit only lenders.
  • Negative credit information reporting for borrowers whose loans were performing previously but became non-performing as of April 1 has been suspended until September 30th 2020.

LEAVE A COMMENT

Please enter your comment!
Please enter your name here

Google Assistant to be adopted on high-end 2020 Samsung smart TV’s without additional hardware

Samsung is set to natively support Google Assistant on its high-end smart TV’s released in the course of 2020. This comes as...

Scheduling smart home actions is now possible with Google Assistant’s latest update

A feature that was revealed by Google back at CES 2020 is finally now coming to users in the latest update to...

Huduma cards expected to replace traditional Identity cards as main form of identification in Kenya

Long awaited Huduma Namba that elicited all forms of controversies when launched may be on the way to Kenyans after all. This...

Safaricom uninterested to continue naturing e-commerce site – Masoko, opting for partnerships

Kenya’s e-commerce segment holds the most potential in the retail market, as more Kenyans are now opting for online shopping instead of...

How to videoconference in Google Meet using neat virtual custom backgrounds

The novel corona virus has surely brought a new world order in the ways that we conduct ourselves including how we work....

MacOS Big Sur apparently rendering older macs unusable with black screens

Users within the Apple ecosystem are used to lengthy software support on their devices ranging from iPhones, Apple TV’s, Apple Watches and...

Samsung unveils M5 and M7 smart monitor with both PC and smart TV features

While the current pandemic has altered our once normal way of life, we’re just starting to notice its effect on technology with...

Kenya set to unveil a virtual library for citizens to access timely information from the KNLS

Kenya’s government is prepping to launch a virtual library for citizens to access relevant information that it currently held by the Kenya...