Lenders To Face ksh 2 million Fine For Denying Loans To Defaulters

Kenyan bank notes

Lenders will be fined ksh 2 million  for each defaulter denied a loan during this COVID-19 pandemic.

The Treasury announced this after lenders denied loans to around 2.5 million Kenyans who are currently going through hard economic times caused by the virus impact.

“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,” says Treasury Secretary Ukur Yatani in the new CRB regulations

Last month, Central Bank stopped digital lenders and Credit-Only companies from submitting defaulters names to the CRB. Digital lenders only submit over 1 million Kenyans to the CRB in a very short time.

Central Bank of Kenya (CBK) also directed all regulated lenders including commercial banks, microfinance institutions and Saccos never to blacklist any borrower with a lon less than ksh 1000.

In a move to clean up and stop CRB misuse, CBK and Yhe Treasury are now after protecting the common citizens especially during this time where Coronavirus is shattering the economy. 

The score should not be a basis for you being denied, it should be a basis for banks to be able to price the risk ,said Habil Olako, CEO Kenya Bankers Association (KBA)
“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,” he added 

Most employees are home to to job losses .Businesses are closed or half performing due to low number of customers . In this regard, lenders should come in to help instead of discriminating borrowers. 

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