The Chairman of the Digital Lenders Association of Kenya, Kevin Mutiso has said that digital lending has been cut to about Sh2 billion from Sh4 billion for an average of four to six million people since the announcement by the Central Bank of Kenya (CBK) prohibiting the lenders from listing defaulters with credit reference bureaus (CRB)
“We used to lend up to Sh4 billion a month. Today, we are lending about half of that because we only picked the best customers. We now have about 1.5 million to two million customers,” said Mutiso.
Speaking at the launch of survey findings gauging the use of microloans last week, Mutiso said they now rely on customers with a good repayment history to gauge their trustworthiness.
“The number of borrowers and loan book shrunk because what the CRB order meant that we had to lock out more people. Strategic defaults also happened.”
he said that 55.5pc of people interviewed said they take loans to boost their working capital while 24.8 percent use it for emergencies, while 13pc use it to pay school fees.
According to DLAK, customers’ motivation to repay loans went down after CBK announced that they would no longer be listed with the CRB in April last year. Mutiso says it then became difficult to identify good and bad borrowers, hence the resolution to cut down loan amounts.
