The Central Bank of Kenya (CBK) has now barred 624 digital loan apps, lenders, and credit-only providers from sharing information on loan payments and defaults since last year.
According to new data, Kenya had 1,994 third-party data providers allowed to share borrowers’ loan defaults and payments with Credit Reference Bureaus (CRBs), a 23.8pc drop from the 2,618 firms licensed the previous year.
The banking regulator attributed the fall to the ban, which came after Kenyans complained over widespread misuse of the credit information sharing (CIS) mechanism.
CRBs are allowed to contact third parties including digital lenders for information on loan payments and defaults for onward sharing to banks, microfinance institutions and saccos.
“The decline in numbers follows CBK withdrawal on April 14, 2020 of 491 approvals granted to unregulated digital (mobile-based) and credit-only lenders as third-party credit information providers to CRBs,” the banking regulator says in its Supervision Annual Report 2020.
The move from CBK came at the peak of mounting loan defaults and increased risk due to the economic shake by coronavirus-induced layoffs, salary cuts, and depressed sales firms.
Kenya also froze CRB listing for loans that were defaulted from April 1st with the relief which was aimed at cushioned borrowers in the wake of the Coronavirus economic fall-out lasting six months up to September 30.