Thursday, March 28, 2024

Tala, Branch banned from listing borrowers on CRB

Tala CRB Clearance: Mobile lenders Tala and Branch are among over 330 mobile lenders who have been banned from listing borrowers on the Credit Reference Bureau.

The two leading lenders were chopped off from the current list that shows that the number of firms allowed to blacklist defaulters with the bureaus has dropped to 2,254 in September from 2,332 in May last year.

This move comes as the Central Bank of Kenya rushes to tame rogue mobile lenders in Kenya who have populated CRBs with defaulters of Sh. 1,000 and below.

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“The withdrawal is in response to numerous public complaints over misuse of the CIS (credit information sharing) by unregulated digital and credit-only lenders, and particularly their poor responsiveness to customer complaints,” the CBK said.

In April this year, the CBK ordered that over one million Kenyans be delisted from the credit reference bureaus. The order demanded that Kenyans with loan defaults of less than Sh. 1,000 be removed from the CRB.

This came 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. Tala CRB Clearance.

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