On Wednesday, President Uhuru Kenyatta directed the Treasury Secretary to seek Parliamentary approval for indefinite suspension of listing of loan defaulters with Credit Reference Bureaus (CRBs).
“CRB listing of M-Shwari customers will be suspended for the next 90 days. NCBA and Safaricom will continue engaging and working with customers during this time to ensure they can manage loan repayments,” the statement read.
As a result, borrowers on the platform, powered by Safaricom’s M-Pesa, will not be charged additional 7.5% fees if they roll over debt to the following month, NCBA and Safaricom announced in a joint statement on Thursday.
Launched in 2012, M-Shwari, is Kenya’s first mobile lending app and is one of the largest source of instant short-term credit for families and micro and small-sized businesses, repayable within a month.
Between the third quarter of 2017 and first quarter of 2018, an average Kenyan borrower has more than 7 mobile loans, according to a Market Overview of Mobile Loans in Kenya report by Credit Info.
Mobile lending firms disbursed a total of Sh112 billion ($1.12 billion) to Kenyan borrowers between November 2018 and March 2019 with M-shwari, KCB M-pesa, Timiza being the main lenders, data from CRB show.
CRB rules require banks, microfinance institutions and deposit-taking saccos to share credit data with the CRBs, while others such as mobile lenders are classified as third-party data providers. Third-party institutions need to obtain consent from clients before sharing information on credit worthiness.
It is not yet clear which framework NCBA will use to share credit history data for defaulters after 90 days if the CRB regulations are suspended.