Loan Defaulters: CRB Listing Set To Resume

The six-month grace period of suspension of Credit Reference Bureau (CRB) listing for loan defaulters is set to expire on Wednesday, September 30.The Central Bank of Kenya (CBK) is yet to issue a communication on the matter, meaning that failure to extend the suspension will result in blacklisting of loan defaulters.In a press release dated April 8, 2020, CBK announced the CRB listing freeze as part of Covid-19 relief measures to cushion Kenyans. Central Bank of Kenya Governor Patrick Njoroge during a press conference in Nairobi on May 28, 2020.Twitter “On the recommendation of CBK, (Treasury CS Ukur Yattani) published the suspension for a period of six months, the listing of negative credit information for borrowers whose loans were performing previously but have become non-performing from April 1, 2020.”Consequently, loans that fall in arrears from April 1 to September 30, 2020, will not lead to the “blacklisting” of the borrower on the CRBs,” reads the statement in part.Banks, saccos and microfinance firms will now be free to provide negative credit information to the the CRB after the deadline on Wednesday.The failure to extend the CRB listing suspension will risk loan defaulters being blacklisted and further impacting on their changes of borrowing more.Credit Information Sharing Association of Kenya CEO Jared Getanga says communication from CBK is yet to be issued.”We are waiting for the CBK to provide guidance, the matter is in their hands. It cannot just happen automatically because some aspects of resumption need guidance.Over 3.2 million Kenyans are blacklisted for defaulting on loans with data indicating that the number jumped from 2.7 million in 2019.The rise has been attributed to the Covid-19 pandemic (prior to the suspension of listing) that saw many Kenyans lose their jobs and businesses suffer enormous losses.Workers and businesses defaulted on loans worth Ksh30 billion in the four months up till June when the pandemic hit the country.According to data from CBK, Non-Performing Loans (NPLs) jumped from Ksh379.9 Billion in June from Ksh349.9 Billion at the end of February.Banks have also been forced to restructure loans worth Ksh844.4 Billion in order to ease the burden on borrowers which is 29% of industry total credit.Part of the restructuring involved non-payment of loans for up to three months and extension of credit tenures.Should the extension fail to be announced, CBK will need to offer directions on how lenders and CRB will treat the restructured loans. File image of Kenyan banknotesFile