CBK Allows Banks To Blacklist Loan Defaulters Pardoned Due To Covid-19

The Central Bank of Kenya (CBK) has given a nod to banks to blacklist loan defaulters who had been pardoned due to Covid-19.

The banks will now be free to forward the names of the defaulters to the three Credit Reference Bureaus (CRBs) – Metropol, TransUnion and Creditinfo International – for blacklisting.

On Wednesday, CBK governor Dr Patrick Njoroge refused to extend the six-month moratorium that expired on September 30. The defaulters, under the law, will have a three-month notice that expires in January 2021. If they fail to pay within that period, they will be blacklisted.

“The point here is to emphasise we are going back to the normal operations, the way things used to happen and that’s where we will be from October 1.They will give you 30 days so you have three months to regularise whatever you had not paid,” Dr Njoroge said.

Before April 1, when the government issued the moratorium directive, at least 3.2 million were listed with the CRBs, and the number is set to rise by thousands in January.

Read: Kenyans Who Have Defaulted Loans Less Than Sh1,000 To Be Delisted From CRBs – CBK

Data from the banking sector shows that workers and businesses defaulted on loans worth Ksh30 billion in the four months to June.

The ratio of Non-performing loans rose from 12.7 per cent in February to 13.6 per cent in August— the highest since August 2007 when it stood at 14.41 per cent.

On March 25, 2020, President Uhuru Kenyatta ordered the temporary suspension of the listing with CRB of any person, Micro, Small and Medium Enterprises (MSMES) and corporate entities whose loan account had fallen overdue or is in arrears, effective April 1, 2020.

According to the Head of State, this was aimed to relieve the burden caused by COVID-19 that has rendered several people jobless due to tough economic times.

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