Borrowers with below Sh5Mn loan survive CRB blacklisting in new move by CBK

By Godrey Were

Kenya’s Central Bank (CBK) has announced the suspension of negative credit listing for borrowers with loans below Sh5million for a period of one year in what now offers a relief to Kenyans listed on various credit reference agencies.

In a statement yesterday, the financial sector regulator said the directive which took effect from October 1 will end on September 30, 2022 in a move expected to spur the SME – sector growth.

As a result, the announcement will now see the country’s three licensed credit reference agencies, Credit Info, Metropol and Transunion Kenya barred from ‘blacklisting’ such borrowers atleast until October 1, next year, when the grace period comes to an end.

“Further, CRBs will not include in any credit report, any negative credit information for loans of a customer less than Sh5 million submitted to the CRB from October 1, 2020 to September 30, 2021, for a period of 12 months from October 1, 2021 to September 30, 2022,” noted the Apex bank in its Monday statement.

The directive was announcement by President Uhuru Kenyatta in his Mashujja day celebrations speech– noting that it was one of the measures being taken by the State to hasten the rebounding economy which had been ravaged by the devastating impact of the Coronavirus pandemic.

The CRB listing relief is part of a stimulus package by Kenyatta’s administration to cushion distressed businesses and families from the effects of the Covid-19 pandemic, whose impact had hit consumer demand and forced businesses to send packing its workforce and cut back their operations.

It is the second time and the longest the government is extending such loan deferrals to distressed borrowers having initiated a similar gesture in April last year as part of the measures to cushion loan defaulters hit by the pandemic. CBK gave a six-month suspension of CRB listings at the time.

The moratorium lapsed in October, allowing financial institutions to start sending names of defaulters to the three bureaus. Lenders, however, offered defaulters 90 days or three months from October 1 to start repaying their loans or get listed with CRBs.

“The mechanism has facilitated the development of a credit history for Kenyans to enable them access cheaper credit. This is particularly important for those borrowers who do not have collateral such as title deeds that have traditionally been used to secure credit,” noted CBK while making the announcement.