CBK Directive on CRB Listing Has Lost 4 Million Customers for Online Lenders

Loan Apps Kenya

Digital lenders have offered their services to Kenyans for a long time without any kind of regulation from the CBK or key parties such as the Office of the Data Commissioner.

The wiggle room has seen the apps grow substantially, and with their business model of offering loans to Kenyans sans any kind of collateral, it means that their interest rates, as well as the repayment period, have been punitive.

The apps, even up to now, still harass defaulters and have also been under scrutiny for blatant user data abuses. Heck, some borrowers could not even access their services if they had multiple loan apps on their devices.

The issues are known to many, which is why developments from the recent pasts are geared toward taming the space once and for good.

Specifically, back in 2019, the Kenya Banking Charter proposed tough regulations for digital lenders.

In 2020, the CBK announced that it was preparing a Digital Lending Charter to police aggressive mobile lenders.

In the following months, it was revealed that unregulated mobile lenders, which basically means the lion’s share of Kenya’s digital lenders, could not get access to CRB where defaulters are listed.

That was not all. The CBK even said that it would revoke the licenses of debt-shaming lenders if the contents of the CBK Bill, 2021, are passed by the President. In the same spirit, the office of Kenya’s Data Protection Officer started investigating loan apps that have since been reported to abuse personal customer data. In fact, it is so bad that such lenders could face prosecution and hefty fines in other countries such as Nigeria.

Now, we know that the CBK directed lenders from listing customers at the CRB primarily because the country has been going through a rough economic patch.

The directive went live on April 2021 for all loans under KES 5 million.

This, according to online lenders, has lowered the motivation for borrowers to pay their loans.

It is also for this same reason why some customers have reported that they cannot access online loans anymore, considering it was so easy doing so in the past.

Online lenders add that they were disbursing up to KES 4 billion per month prior to the directive. Their services also had up to 6 million customers.

Now, the companies are only able to disburse between KES 1 billion and 2 billion per month.

The number of customers has also dropped to about 2 million.

Whether this will change when the directive is lifted five months from now is something we will have to wait and see. At the same time, we hope that the office of the Data Commissioner, the CBK, and its CBK Bill, 2021, will police the space so that customers are shielded from the predatory nature of loan apps.