Banks are treading carefully in the implementation of President Ruto’s directive.

Upon assuming office Dr.Ruto promised a revolution in the CRB (Credit Reference Bureau) framework.

Relaxing the CRB enlisting could cause banks to be extremely categorical on how loans are disbursed thereby limiting credit flow.

The move therefore could end up being counter-productive and hurt the banking sector.

Again failing to punish defaulters by way of blacklisting could potentially kick lenders out of business.

A similar move by the Kenyatta administration in 2020 flopped. When the government suspended CRB listing as a measure of cushioning citizens from the effects of Covid-19 lenders cut on lending.

Ironically, President Ruto explained that the measures to make credit more readily available were meant to enhance job creation and lower the cost of living.

”Our starting point is to shift the CRB framework from its current practice of arbitrary, punitive, all-or-nothing blacklisting of borrowers that denies borrowers credit,” he stated.

A credit score is a performance index assigned to a borrower based on how well or how dismally they can service their loans. A low rating indicates inefficiency in paying loans while high credit scores are assigned to those who pay within the agreed timelines.

In some instances, lenders with bad credit scores are denied loans from financial institutions.

Tens of thousands of borrowers have been enlisted in the CRB for defaulting payment of loans.

By June non-performing loans hit a record high of Sh.514.4 billion.

The directive by William Ruto has elicited mixed reactions. While defaulters may be happy, bankers warn that this move could lead to credit hoarding.

Credit Reference Bureau has three licensed operators in Kenya; Creditinfo Group, Transunion, and Metropol.

Data shows that most loan defaulters have borrowed through mobile apps and mobile banking.

With the sharp increase of loan defaulters, financial institutions are relying on the Credit Reference Bureau to assess credit risk before issuing loans.

This is because the Credit Reference Bureau can be accessed by multiple financial institutions.

Whether or not the move by Kenya Kwanza is a feasible strategy to spur job creation is a question only time will tell.

Banks are treading carefully in the implementation of President Ruto’s directive.

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Banks are treading carefully in the implementation of President Ruto’s directive.

Tiktok :The Popular App Destroying Generations

Six Top Youngest Billionaires In The World

Most Read

Latest News

Related Stories

Govt Announces Loan Amounts Kenyans Can Access Through Hustler Fund

CBK To The Rescue As Kenyans Given Additional Six Months To Clear Mobile Phone Loans

Remarks By H.e William Ruto, President Of The Republic Of Kenya During The KNCCI MSME Roundtable

Details Of South Africa’s President Cyril Ramaphosa State Visit To Kenya.

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