In what seems to be another strategic move given the uncertain economic times, the Central Bank of Kenya has announced that unregulated digital lenders, will no longer have access to the country’s credit reference bureaus (CRBs).
The CBK states that this move became necessary as a result of several complaints from the public about the misuse of Credit information sharing by lending apps, and poor customer services.
Recall that the Kenyan government recently suspended all listing of borrower credit information on the credit reference bureaus for 6 months in order to cushion the effect of the pandemic for individuals and companies.
According to a report, the number of blacklisted borrowers hit 3.2 million persons in earlier in April, and with no immediate signs of relief from the pandemic, many more borrowers risked getting locked out of access to credit facilities.
Given that most borrowers can easily get loans through these digital lenders, this new policy appears to have taken it up a notch.
Regulated digital lending apps such as those attached to banks or micro-finance institutions will still have access to the CRB, but the others that are neither licenced or registered will face the brunt of this new directive.
With this denial of access, unregulated digital lending platforms will not be able to blacklist any defaulting borrower and access to a prospective client’s credit information would be denied.
The crackdown on predatory loan apps has been in the works for quite some time and has not been limited to just Kenya.
Last year, Google released new sets of guidelines in order to stem the activities of predatory loan apps on the apps store. Though no action has been taken yet, on closer inspection, it is revealed that most digital lenders in Nigeria are also guilty of such violation.
In 2018, the CBK began advocating tougher regulations on digital lenders and earlier this year, the National treasury backed the Apex bank in its resolve.
So far, not much has been done in the way of protecting borrowers in Nigeria and most other African countries, and it remains to be seen if such policies will be enforced to help businesses and individuals cope with the effects of the pandemic.