Banks to start blacklisting loan defaulters at CRBs after CBK’s Nod

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Since Kenya reported the first case of Covid-19 in March, several measures were hastily put in place to cushion citizens from the adverse economic effects of the pandemic.

That included slashing mobile transfer fees below KES 1000 and a six-months reprieve to prevent banks from listing loan defaulters with credit reference bureaus (CRBs).

The freeze mandated banks not to list defaulters with CRBs on loans defaulted after April 1. The embargo started on April 1, ending yesterday, on September 30.

As the economy starts to open up slowly, the Central Bank of Kenya (CBK) has ditched plans to renew the six-month listing freeze. That means banks can now blacklist loan defaulters who haven’t serviced their loans for more than 90 days.

“The point here is to emphasize we are going back to the normal operations, the way things used to happen, and that’s where we will be from October 1,” said CBK Governor Patrick Njoroge.

Data from the banking regulator shows the percentage of non-performing loans rose sharply in the pandemic induced economic fallout to Sh379.9 billion in June.

Before the pandemic kicked in, over 3.2 million people were already listed at Kenya’s three credit reference bureaus – TransUnion, Metropol, and Creditinfo International.

That figure could potentially rise with the growing number of loan default rates reported by financial institutions in the wake of COVID-19.

Kenyans will soon be entitled to a 30-day notice from lenders before listing their names with a CRB if the published draft CRB regulations 2019 is approved.

And for the free mobile cash transfers below KES 1000, the regulator extended the grace period for seven months. As a result, Kenyans continue to enjoy sending cash below 1000 for free till ending December 31.

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