CRBs can only list mobile loan borrowers after defaulting for 6 months: CBK orders

The Central Bank of Kenya has issued a circular to Credit Reference Bureaus (CRB) to adjust their listing criteria for all types of loans to align with traditional bank loans.

In a circular posted on May 28 and addressed to CEOs of commercial banks, mortgage finance companies, microfinance companies and Credit Reference Bureaus, CBK has ordered that the new template for sharing of credit information with CRBs takes effect by September 2019.

CBK said the new template will address the challenges of including non-traditional forms of credit such as digital loans which have a 30-day repayment period.

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The revised template is a product of a Technical Working Group (TWG) that was tasked with recommending reforms of the Credit Information Sharing (CIS) mechanism.

The TWG comprises of representative of CBK, CRBs, Kenya Bankers Association, Credit Information Sharing – Kenya and the World Bank.

“The revised DST (Data Specification Template) was successfully piloted among selected credit information providers and all CRBs from October 2018 to March 2019 and is ready for rollout,” reads the circular.

Implication

In addition to standardizing all types of loans, the DST has introduced a daily submission of customer information to CRBs which means the bureaus will have updated information of customers. New standard validation checks have also been introduced to enhance data acceptance rates.

The Non-performing Loans indicator field has been reclassified to Prudential Risk, “to ensure loan classification is done as per CBK Prudential Guidelines” which considers a loan to be in default after 180 days (six months)

A recent report by one of the CRBs indicated that more than 2.7 million Kenyans have been blacklisted for defaulting on mobile loans.

Of these, more than 400,000 people have been blacklisted for defaulting on loans of Sh200 and below.