Mobile Loan Firms To Set Up Real-Time Credit Sharing System To Tame Defaulters

In a bid to tame mobile loan defaulting from one mobile lender to another, twelve firms under the Digital Lenders Association of Kenya (DLAK) are working on a real-time Credit Information Sharing System (CISS) to allow members access real time access to customers borrowing history.

“The real-time credit information system will help us see just how much indebted a customer is, and we hope other lenders to contribute the information,” says Tala East Africa Country Manager Mr. Ivan Mbowa .

Currently, mobile lending firms in the Association have been withholding credit information about their clients who often proceed to secure loans from other lenders after defaulting with multiple others.

As reported by Capital Business, Mr. Mbowa’s sentiments come against the backdrop of a study conducted by the Central Bank of Kenya (CBK) showing that 16.6 percent of digital borrowers take up a loan to pay for another, entangling them in a vicious cycle.

At the moment, over 400,000 people have been blacklisted for defaulting on loans of Sh200 and below.

According to a directive issued by the Central Bank, digital lenders have been asked to operate as normal loans where a customer will be considered to have defaulted after six months.

The directive also requires that all financial institutions must forward customers’ information to CRB every day to ensure that information is up to date and those who have resumed servicing their facilities are not listed as defaulters. Capital Business added to its reporting.