CBK Gives Digital Borrowers Six Months to Repair Their Credit Standing

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At the start of the new Kenyan administration, President Ruto announced that he would see that people who have been listed by the CRB for defaulting their loans will be de-listed from the Bureau, which would then give them a chance to access other credit facilities while working on a plan to furnish their loans.

This has been a concern for many Kenyans, many of whom had been listed in the CRB for defaulting as little as KES 200.

This also means that such people’s credit scores are poor and cannot access loan facilities to develop themselves or their businesses. Accordingly, the President said that this should not be the case.

It should be remembered that there are a lot of loan products out there. Some of them have been operating illegally and have seen millions of Kenyans fall into their debt trap, although that has since been tamed after the passing of a new law.

Other loan products are offered by legitimate organizations, including telcos such as Safaricom which has products such as M-Shwari, KCB M-PESA and Fuliza.

We have since learned that people who have defaulted the said loans will soon be delisted from CRB, and that number is around 4 million (this is the approximate number of people whose names had been forwarded to CRB for not paying their loans by Safaricom).

However, this who situation of de-listing people did sound sketchy for some people because it failed to answer some questions, such as when such culprits will pay their current loans.

Luckily, the CBK has some answers following the announcement of the Credit Repair Framework.

According to the CBK, the framework will improve the credit standing of mobile phone digital borrowers whose loans are non-performing and have been reported to CRB and similar institutions.

Nonetheless, the framework is not a permanent one because it will expire on May 31, 2023.

This means that for the next six or more months, the concerned lenders will need to contact their borrowers and give them more details about how they will clear their loans.

One of the suggestions in the framework is that lenders will offer a discount of at least 50 percent of the non-performing digital loans outstanding as of the end of October 2022.

Lenders and borrowers will then enter into a repayment plan that should be completed by the next six months. Once the Framework expires, the credit standing of the borrowers will depend on their repayment performance.

Furthermore, the Framework will cover loans with a repayment period of 30 days or less and were offered by lenders through mobile phones.

To this end, it is anticipated that over 4.2 million borrowers will have a chance to repair their credit standing.

“The total value is approximately KES 30 billion, equivalent to 0.8 percent of the gross banking sector loan portfolio of KES 3.6 trillion at end of October 2022,” says CBK in a statement.

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Kenn Abuya is a friend of technology, with bias in enterprise and mobile tech. Share your thoughts, tips and hate mail at [email protected]