The coronavirus has not ended but the Central Bank of Kenya appears to be running out of patience. Once again, if you had borrowed money from any of the country’s commercial banks and default in repaying, your name risk being published in the public domain, in this case, the country’s Credit Reference Bureaus (CRB). The Bureaus had been on months-long break in compliance with the directive of the Central Bank of Kenya to cushion borrowers against the impact of the coronavirus, but is now back. 

“ In terms of the measures that are ending, that I think is clear, so from October 1 the banks will begin accessing their borrowers, then you will have three months to regularize what you were not paying,” said Njoroge during the post MPC briefing.

“The point here is to just emphasize that we are going back to the normal operations and that is where we will be come October 1,” he added.

Here Is What You Need To Know

• CBK governor Patrick Njoroge said the measures that were implemented by the banks 6 months ago to cushion distressed borrowers from the harsh economic environment occasioned by the coronavirus pandemic will end today.
• CBK announced the suspension of CRB listing for defaulted loans in April 2020, with the relief from being blacklisted lasting for six months up to September 30.
• This was part of the stimulus packaged announced by the bank regulator on March 25 to cushion borrowers where many Kenyans were facing pay cuts while about 1.7 million were issued with redundancy notices during the pandemic according to a survey by the Kenya National Bureau of Statistics.
• On September 29, the Central Bank of Kenya announced that banks have restructured loans worth Sh1.12 trillion.
• This represents 38 percent of the total banking sector loan book of Sh2.9 trillion by the end of August.
• Personal and household loans topped the list with Sh271 billion reviewed since March.
• Other sectors such as trade, manufacturing, real estate, and agriculture were offered relief of loans that amount to Sh849.9 billion.

Read also: Kenya Bans Digital Money Lenders, Extends Loan Repayment Period For Businesses

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Ban On Digital Lenders

• According to the Central Bank of Kenya (CBK) in May, 2020, digital and credit only lenders will no longer submit credit information on their borrowers to Credit Reference Bureaus (CRBs).
• In the statement, CBK explained that the withdrawal is in response to numerous public complaints about misuse of the Credit Information Sharing System (CIS) by the above-mentioned lenders and particularly poor response to customer response.
• In March this year, Kenyan Parliament considered a petition to launch investigations into the operations of digital money lending institutions over claims of exploitation of borrowers.

Read also:Lending Rate in Kenya Now 8.5%, Down From 9%, First Ever In A Year

Implications For Digital Lending Startups In Kenya:

This continues to be a hard time for startups desiring to set up a money lending business in Kenya anytime soon. Without having the power to report customers for blacklisting to the country’s central credit information sharing center, it is only safe to say that their business model has become entirely a highly risky one.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer