The Central Bank of Kenya (CBK) has announced the rollout of a Credit Repair Framework for mobile loans by commercial banks, microfinance banks and mortgage finance companies
In a statement issued on Monday, November 14, 2022, CBK said that banking institutions will be required to provide a discount of at least fifty percent of the non-performing mobile phone digital loans outstanding as of October 2022 and update the borrowers’ credit standing from non-performing to performing.
According to the regulator, the programme was agreed upon by the commercial banks, microfinance banks and mortgage finance companies that offered the loans to mobile phone users.
“Through the Framework, the institutions will provide a discount of at least fifty percent of the non-performing mobile phone digital loans outstanding as at end October 2022, and update the borrowers credit standing from non-performing to performing.
“The institution will then enter into a repayment plan with the borrowers for a period up to May 31, 2023, for the balance of the loan. Upon expiry of the Framework, the credit standing of the borrowers with respect to these loans will depend on their repayment performance during the six-month period,” read the statement in part.
The limited Framework will expire on May 31, 2023.Â
Upon the expiry of the framework, the credit standing of the borrowers with respect to these loans will depend on their repayment performance during the six-month period.Â
The notice indicated that the framework will cover loans with a repayment period of 30 days or less and were offered by these institutions through mobile phones.
“It is anticipated that the Framework will enable over 4.2 million mobile phone digital borrowers, adversely listed with CRBs, to repair their credit standing. The total value is approximately Ksh.30 billion, equivalent to 0.8 percent of the gross banking sector loan portfolio of Ksh.3.6 trillion at end October 2022,” added the statement.
The initiative is part of the post Covid-19 economic recovery plan and targets borrowers in personal and micro enterprise sectors.
However, CBK asked the public to always honour their repayment obligations.
