CBK’s CRB Listing Policy Lost 4 Million Customers for Online Lenders
Digital lenders have long been offering their services to Kenyans without any regulation by the CBK or key parties like the Office of the Data Commissioner.
The leeway has caused the apps to grow significantly, and with their business model of offering Kenyans loans without any collateral, this means that their interest rates as well as the repayment period have been punitive.
The apps themselves are still bothering the insolvent and have also been put to the test because of the obvious misuse of user data. Some borrowers might not even be able to access their services if they have multiple loan apps on their devices.
The problem is well known to many, which is why recent developments are aimed at taming space once and for all.
In 2019 in particular, the Kenya Banking Charter proposed strict rules for digital lenders.
In 2020, the CBK announced that it was preparing a digital lending charter to monitor aggressive mobile lenders.
In the months that followed, it became known that unregulated mobile lenders, which basically means the lion’s share of Kenya’s digital lenders, were unable to get access to CRB, which lists insolvents.
That was not all. The CBK even said it would revoke the licenses of debt damaging lenders if the contents of the CBK Act were passed by the President in 2021. In the same vein, the Kenyan Data Protection Commissioner’s office began investigating credit apps that have since been reported to misuse customer personal information. In fact, it is so bad that such lenders could face criminal prosecution and heavy fines in other countries like Nigeria.
Now we know that the CBK directed lenders to list clients with the CRB, mainly because the country was going through a difficult economic period.
The policy went into effect in April 2021 for all loans below KES 5 million.
This has lowered the motivation for borrowers to pay their loans, according to online lenders.
For the same reason, some customers have reported that they can no longer take advantage of online loan as it was so easy in the past.
Online lenders add that they paid out up to KES4 billion per month prior to the policy. Their services also had up to 6 million customers.
Now companies can only pay out between KES 1 billion and KES 2 billion per month.
The number of customers has also dropped to around 2 million.
We will have to wait and see if that changes when the directive is repealed in five months. At the same time, we hope that the CBK’s office and its CBK 2021 Act will monitor the room to keep customers safe from the predatory nature of credit apps.