If the real-time credit information system is implemented, then firms under the Digital Lenders Association of Kenya (DLAK) will have access to customers borrowing history which will help them greatly in taming defaulters who borrow from one mobile lender, default and run to another mobile lender to borrow another loan and default in that order.
Credit Information Sharing System (CISS) will help lenders see just how much indebted a customer is before they give him or her another loan. This is after a study by the Central Bank Of Kenya which showed that 16.6% of digital borrowers take up a loan to pay another loan.
Tala East Africa Country Manager Ivan Mbowa says some 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. He further said that the failure by some lenders to submit information to the Credit Reference Bureau is a major hindrance to tracking a customer borrowing history.
He further said that listings on CRB are usually not timely which makes it cumbersome to track their customers’ lending habits since some of the customers borrow more than once or twice from different lenders in a month wherein more than 68% borrow a loan to pay another loan.
As of last month, more than 400,000 people had been blacklisted for defaulting on loans of Sh200 and below.
The Central Bank of Kenya had issued a circular last week directing all mobile loan lenders to operate as normal loans where to consider a customer as a defaulter, then he must have exceeded by 6 months. All financial institutions must also 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.
Digital lenders collect personal data only relevant to the services provided, and for which the borrower has given express permission hence borrowers will also enjoy data privacy