DCF 1.0

The Central Bank of Kenya (CBK) has directed financial institutions to begin effecting an order directing the freezing on new CRB listings for loan defaulters of sums below Ksh.5 million.

Kenyans with loans below Ksh.5 million that were performing but fell into default after October 1 this year and those who fall into default between now and September 2022 will not be listed with credit reference bureaus (CRBs).

At the same time, financial institutions will not use ‘blacklisted reports’ dated between October 1 last year and September 30 this year in assessing borrowers creditworthiness. The directive by the CBK is on the back of a Presidential order effecting the very listing freeze on October 20 as the government seeks to anchor credit growth to the private sector as part of third COVID-19 recovery stimulus program.

Nevertheless, the CBK wants banks and peer institutions to incorporate credit risk-based pricing on new loan disbursements. CBK has encouraged borrowers to fulfil their contractual obligation with creditors and engage lenders in case of concerns.

Previously, banks suspended new CRB listings between March last year and March this year in comparable orders to the current moratorium. The order is seen as a cushioning measure to businesses and households who would otherwise be denied credit on their CRB listing status.

Negative CRB listings hit a high 14 million at the start of the year pointing to increased distress among Kenyans.

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