Governance

With Increasing Loan Defaults, What Happens When CRB Listing Grace Period Ends?

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CBK-CRB directive
Image courtesy Citizen Digital

The Central Bank of Kenya’s (CBK) six-month suspension of CRB listing for loan defaulters is now coming to an end come Wednesday this week, giving lenders the way to get back to their old ways. The Central Bank had announced the freeze of CRB listing from April 1st, a directive that will have lasted for six months come September 30th.

The CRB listing relief was part of a new objective by the government to cushion individuals and enterprises from the financial effects of the COVID-19 pandemic. The rule was prompted by the hard-hit consumer demand forcing businesses to shed jobs and cut back on their regular operations.

If the moratorium is not extended, borrowers across the country will now risk being blacklisted and hurting their chances of being able to borrow more. As it stands, credit services have been rare to find in the last few months as lenders tried to adjust to the suspension.

As for now, all focus shifts to the CBK governor Patrick Njoroge on whether the directive will be extended for the rest of the year.

“We are waiting for the CBK to provide guidance, the matter is in their hands. It cannot just happen automatically because some aspects of resumption need guidance,” said Jared Getanga CEO of Credit Information Sharing Association of Kenya, in an interview with Business Daily.

According to the CBK, there are currently more than 3.2 million Kenyans listed as loan defaulters. This is a jump from last year’s 2.7 million, most of whom were and are still linked to mobile digital lenders.

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