CBK Issues New Guidelines for Listing Loan Defaulters

Remittance inflows continue to provide a stable source of foreign exchange for Kenya and key support for many households

Dr Patrick Njoroge, CBK Governor Displaying some of the new currency Notes

The Central bank of Kenya (CBK) on Thursday issued new guidelines for the listing of loan defaulters with Credit Reference Bureaus (CRBs) following end of the six-month suspension. 

In a release, the central bank said borrowers are “always required to fully service their loan obligations on a timely basis and engage their lenders in case of any concerns’.

“The suspension did not apply to loans that were non-performing before April 1, for which the regular procedures continued to apply,” CBK clarified.

Under the new guidelines, financial institutions will from October 1, 2020, access the performance of all loans that were performing before April 1.

“Specifically, financial institutions will from October 1, 2020, assess the performance of all loans that were performing before April 1. 

For those loans that went into arrears after that date, the period for determining their performance begins on October 1, 2020. If a loan is in arrears after 60 days from October 1, a financial institution will, in accordance with the existing procedures, give the borrowers notice of the intention to list them with the CRBs. 

If the loan has not been regularized after the 30-day notice period, the financial institution will then list the non-performing loan with the CRBs. Consequently, borrowers whose loans were performing before April 1 and subsequently went into arrears, will have three months (up to end December 2020) in accordance with existing procedures to regularize their loans before they are listed with CRBs.”

CBK Governor Dr Patrick Njoroge Wednesday said would commence to blacklist borrowers who have defaulted on their loans.

“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,” Dr Njoroge said.

The Monetary Policy Committee revealed on Tuesday that KSh1.12 trillion loans had been restructured by the end of August in line with the emergency measures announced by CBK on March 18.