CBK reveals list of firms that can list borrowers on default

April 19, 2021 Newsroom

The Central Bank of Kenya has published a list of 1,327 saccos, 600 companies, 50 insurance firms and other institutions that can negatively list borrowers who default on payments.

The list includes utility companies such as water suppliers; insurance firms receiving premiums and Saccos that are not regulated. The entities will help build a client profile on whether they always pay their debts.

CBK also allows 39 banks, 14 microfinance banks, 164 regulated Saccos to using the listing mechanism.

In August last year, the banking regulator revoked the approval of digital lenders to share data with Credit Reference Bureaus. The move barred 337 unregulated digital mobile lenders from forwarding the names of loan defaulters to the bureaus.

CBK also kicked out credit only microfinance institutions from sharing borrower’s data.

The regulator reckoned that many low income households have been lured into the easily accessible mobile loans, which have aggressive recovery methods.

A majority of loans defaulted by Kenyans are taken from mobile lenders with digital lenders making up 90 per cent of the negatively listed Kenyans.

Kenyans have struggled making loan payments but are also falling back on utilities and other commitments due to the economic difficulties caused by the Covid -19 pandemic.

A state survey by the Kenya National Bureau of Statistics (KNBS) shows that seven out of ten Kenyans had a difficulty paying rent in May last year when the virus broke out.

About 37 per cent of those who defaulted were unable to pay rent while 23 per cent paid partially and another 8.5 per cent were hopeful of meeting their landlord’s obligations, reflecting the impact of restrictions to curb the global Covid-19 pandemic on workers’ incomes.

The number of people missing payments has continued to grow during the coronavirus pandemic as loan defaults surged to the highest level since August 2007.

About 1.72 million workers lost jobs in three months to last June when Kenya imposed a lockdown to curb the spread of the coronavirus and recovery has been slow with salary cuts persisting in many sectors.

Many workers who had tapped unsecured loans on the strength of their salaries to purchase of goods such as furniture, cars and meet expenses like school fees have struggled to keep up with repayments in the wake of retrenchments and pay cuts.