Delisting From CRB: Over one million Kenyans are set to be delisted from the credit reference bureaus after an order from the Central Bank of Kenya. The order demands that Kenyans with loan defaults of less than Sh. 1,000 be removed from the CRB.
The move comes a few weeks after it was revealed that the number of Kenyans listed on credit reference bureaus has hit 3.2 million. This was a jump from the 2.7 million Kenyans who were listed in the CRB last year. The listing in the CRB represented a 12 per cent rise in non-performing loans in Kenya up from 9.5 per cent in the year 2017.
Of the 2.7 million who were listed in the CRB in 2017, more than 400,000 people have been blacklisted for defaulting on loans of Sh. 200 and below. 16.6 per cent of digital borrowers take up one loan to pay another, ensnaring them in a vicious cycle.
Digital borrowers asking for low amounts (such as Sh. 200) were found to incur high costs to the point where when paying the principal and interest, they were likely to be in a worse off position than they were before the loan.
While the move by CBK is meant to free up borrowers and allow them to access credit facilities, the opposite is more likely to happen. This is because a majority digital lenders whose borrowers form the bulk of defaulters have already frozen their digital loans.
Mobile applications such as Timiza which is owned by Absa Bank Kenya (formerly Barclays Bank Kenya) have stopped issuing mobile loans to borrowers regardless of borrowing history. Others like Tala and Branch have also followed suit.
Last month, President Uhuru Kenyatta directed that Kenyans who failed to pay their dues by April 1 should not be listed in the CRB. The directive did not cover at least 3 million Kenyans listed in CRB.
The President said, he has issued a “temporary suspension of the listing with Credit Reference Bureaus of any person, Micro, Small and Medium Enterprises (MSMES) and corporate entities whose loan account falls overdue or is in arrears, effective 1st April 2020.” Delisting From CRB.