The rise of digital lending platforms like Tala has revolutionized how borrowers access credit in Kenya.
These platforms have made it easier for people to access loans, but with this ease come the potential for misuse of credit information.
Recently, there has been a lot of confusion and misinformation surrounding whether Tala, a mobile lending platform, can list individuals on the Credit Reference Bureau (CRB).
The short answer is no. Tala cannot list individuals on the CRB.
The CBK’s New Regulations
In 2020, the Central Bank of Kenya (CBK) put in place new rules that prevented mobile lending platforms, like Tala, from sharing their customers’ credit information with Credit Reference Bureaus.
The CBK’s statement regarding the new regulations reads in part:
“With immediate effect, CBK has withdrawn the approvals granted to unregulated digital (mobile-based) and credit-only lenders as third-party credit information providers to CRBs.”
The decision was made in response to a spate of complaints about the misuse of customer information sharing, particularly as many borrowers struggled to repay loans amid the economic fallout of the COVID-19 pandemic.
Borrowers who fell behind on their loan payments were reported to the CRB and blacklisted, making it difficult for them to access credit in the future.
“The withdrawal is in response to numerous public complaints over misuse of the CIS by the unregulated digital and credit-only lenders, particularly their poor responsiveness to customer complaints. Thus, unregulated digital and credit-only lenders will no longer submit credit information on their borrowers to CRBs,” CBK issued a statement.
Who Can Report to the CRB?
Under the new regulations, only Banks and SACCOs are permitted to report loan defaults to credit bureaus.
“SACCO societies regulated by the Sacco Societies Regulatory Authority (SASRA) have now been included as authorized subscribers of credit data to CRBs. These SACCOs will now submit borrowers’ information to CRBs and receive credit reports directly from them.”
- The Central Bank of Kenya has recently established new regulations barring unregulated digital lenders like Tala from listing their borrowers on the Central Credit Reference Bureau (CRB).
- This decision aims to protect borrowers from the misuse of customer information sharing (CIS) and ensure that they are not unfairly penalized for missed payments.
- Banks and deposit-taking SACCOs are now the only institutions authorized to report loan defaults to credit bureaus.