Banks to be Fined Sh2 Million for Each Blacklisted Kenyan They Deny Loan

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Banks to be Fined Sh2 Million for Each Blacklisted Kenyan They Deny Loan

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The National Treasury has introduced new regulations that will have banks, microfinance institutions, and Saccos fined Sh2 million for every borrower they deny a loan for being listed with credit reference bureau (CRB).

The Business Daily on Monday reports that the new guidelines are aimed at cleaning out CRBs blacklist in order to enhance borrowers’ chances of being able to obtain more loans.

The regulations state that lenders can only use other factors beyond credit scores earned via CRB listing to reject a loan application and must by writing explain to the borrower why their application was denied.

“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,” a section of the new rules state.

Kenya Bankers Association CEO Habil Olaka agreed lenders should not rely on CRB score to deny Kenyans loans.

“It should be a basis for banks to be able to price the risk. 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 said.

The number of Kenyans listed with CRBs stands at 3.2 million, according to a report released last month.

CRBs were established in 2010 to help commercial lenders assess the risk of lending but they have instead been used to punish defaulting and blacklisted borrowers.

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Banks to be Fined Sh2 Million for Each Blacklisted Kenyan They Deny Loan Reviewed by on May 19, 2020 .

Share thisFacebookTwitterPinterestEmailWhatsAppBanks to be Fined Sh2 Million for Each Blacklisted Kenyan They Deny Loan The National Treasury has introduced new regulations that will have banks, microfinance institutions, and Saccos fined Sh2 million for every borrower they deny a loan for being listed with credit reference bureau (CRB). The Business Daily on Monday reports that the

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