May 9, 2021

Tala, Branch and other Digital Mobile Lenders Blocked from CRB Listing

Tala, Branch and other Digital Mobile Lenders Blocked from CRB Listing
Tala, Branch and other Digital Mobile Lenders Blocked from CRB Listing

Following a recent directive from the Central Bank of Kenya (CBK), over 337 unregulated digital mobile lenders and micro financiers have been blocked from forwarding the names of defaulters from Credit Reference Bureaus (CRBs). The directive delinked unregulated digital mobile lenders from CRBs following a public outcry over widespread misuse of the credit information sharing (CIS) mechanism.

“The withdrawal is in response to numerous public complaints about misuse of the CIS (Credit Information Sharing) by unregulated digital and credit-only lenders, and particularly their poor responsiveness to customer complaints,” the CBK said.

According to the CBK, over 3.2 million Kenyans are  listed as loan defaulters. Compared to last year’s statistics, the loan defaulters were 2.7 million Kenyans which is approximately an 18% rise from last year. Leading digital mobile lending platforms, Tala and Branch are locked out at a time as the bulk of accounts that are negatively listed with CRBs link to digital borrowers.

Under the new regulations, only defaults above Sh 1,000 will be shared with CRBs. This means that all defaulters who had been blacklisted for lower amounts will be cleared immediately.

The reports indicated that most mobile loan applications subject their borrowers to oblivious conditions like a lifetime of SMS notifications, a full surrender of their data to third parties, and a waiver of their right to dignity.

Okash, a digital mobile lender, is known to harass consumers who delayed or defaulted on their loan payments. The services team at Okash reaches out to the consumer’s contact list informing them to remind the defaulter to pay up.

Such as an act is uncouth!

The CBK also gave the banks a green light to blacklist borrowers who defaulted in the wake of the coronavirus pandemic. The CBK had announced the suspension of CRB listing for loans that were defaulters after April 1to September 30 as a relief measure to cushion distressed business and households from the effects of the coronavirus pandemic.

However, loans that fall in arrears from April 1 to September 30, 2020, will not lead to blacklisting of the borrower on CRB. They aim to shield borrowers from the adverse impact of the novel Coronavirus.

Borrowers can check their CRB status with Metropol by dialing the shortcode *433# >> input their national Identification number and follow the steps accordingly. That will require the user to pay Sh 50 to access the service. Borrowers can also download the TransUnion Nipashe app on the play store, enter the ID number then check the status for FREE.

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