The Central Bank of Kenya has announced suspension of Credit Reference Bureau (CRB) listing of loan defaulters owing Sh5 million and below for the period between October 1, 2021 to September 30 2022.
The announcement comes following the directive by President Uhuru Kenyatta on Mashujaa Day.
In a statement, CBK says that loans below Sh5 million that falls in arrears from October 1,2021 to September 30,2022, will not lead to the blacklisting of the borrower on the CRBs.
“Further, CRBs will not include in any credit report, any negative credit information for loans of a customer less than Sh5 million submitted to the CRB from October 1, 2021 to September 30 2022,” reads part of the statement.
“This is one of the intervention measures that were announced on October 20, 2021, in light of the exceptional circumstances from the COVID-19 pandemic and in particular aiming to shield Micro, Small and Medium Enterprises (MSMEs) from the adverse impact.”
In making the recommendation for the suspension, CBK says it was cognizant of the need to balance between providing relif to MSMEs, while safeguarding the effectiveness and the sustainability of the Credit Information Sharing (CIS) framework.
According to CBK, the country has in the last decade developed a robust CIS mechanism for the banking sector.
The mechanism has facilitated the development of a credit history for Kenyans to enable them access cheaper credit.
The CIS mechanism aims to brigade the information about borrowers’ credit worthiness by considering the borrower’s credit history and allowing credit to be priced accordingly.
Therefore, the suspension is targeted to rope in the MSMEs and for specified duration that will provide space to turn around their businesses.
Further, CBK has urged borrowers to fulfil their contractual obligations on a timely basis and engage their lenders incase of any concerns.
The CRB listing relief is part of Kenyatta’s stimulus package to cushion distressed businesses and families from the effects of the Covid-19 pandemic, which have hit consumer demand and forced businesses to shed jobs and cut back their operations.
Borrowers reported to one of Kenya’s three credit bureaux, jeopardise their chances of being able to borrow more.
“The relevant authorities will, for loans less than Sh5 million, effect a moratorium of listing in CRBs for a period of 12 months to end September 2022,” Kenyatta said.
