All lenders that have denied any individual loan because of being listed negatively by the country’s credit reference bureaus (CRBs) will face a penalty of Sh2 million for every defaulter.
Banks and Saccos have denied more than 2.5 million Kenyans loans as CRBs have listed them.
The introduction of fines comes in when the state expects lenders to boost cash flow that has highly been affected by the coronavirus pandemic. Layoffs have been witnessed, and so has low demand for commodities which have pushed households and firms to seek loans for survival. So far, the country has reported 887 cases of the coronavirus out of which 50 people have died.
“An institution that denies a customer a credit facility or any other financial service solely on the basis of a credit score shall be liable to a monetary penalty of two million shillings or such other sanctions under the Act, the microfinance Act, 2006, or the Sacco Societies Act, 2008, as the Central Bank may impose,” said Ukur Yatani the Treasury Secretary in the new CRB regulation.
The score are used as a basis for lenders to be able to price the risk and not for denying people and firms loans.
“People have been denied a credit facility for being listed with CRBs, which is the kind of abuse they are trying to address. That is why the unregulated digital lenders have been kicked out,” said the CEO of Kenya Bankers Association Habil Olaka.