BUSINESS

Loan Apps Lock Out New Customers Over CRB Freeze

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DLAK brings together 25 lenders with over 3 million active customers, including Tala and Branch.
DLAK brings together 25 lenders with over 3 million active customers, including Tala and Branch. [Photo/ Courtesy]
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Digital lenders in the country under the banner of Digital Lenders Association of Kenya (DLAK) have announced plans to only lend to its existing customers, locking out numerous Kenyans from apps such as Tala, Okolea, Branch and Zenka.

In total, DLAK includes 25 lenders with over 3 million active customers.

Digital Lenders Association of Kenya (DLAK) chairman Kevin Mutiso confirmed that they  will only lend to repeat customers in their databases. He argued that provisions on CRB listing had created a difficult operating environment for unregulated lenders.

The unregulated digital lenders have since April 2020 been barred by the Central Bank of Kenya (CBK) from blacklisting defaulters with the three licensed CRBs. Many defaulters are blacklisted for amounts of Ksh1,000 or less and numerous public complaints have been raised of alleged unethical practices by the lenders such as debt-shaming – which involves the lender getting in touch with the customer’s contacts to pressure them into settling the debt.

The Data Protection Act bars the non-consensual sharing of data with third parties and hands individuals the right to be told when their records are being shared and why.

READ>>Atwoli Takes On Fuliza, Digital Loan Apps

Should the Central Bank of Kenya (Amendment) Bill, 2021 sail through Parliament, it would bring the lenders under full regulation by CBK. It would also see the lenders ushered back into the CRB system.

The bill is headed to debate after being greenlit by the National Assembly committee on Finance and National Planning,

‘’We will just set new rules and say no to new customers because if we are not able to access the bureau, we can’t know the record of a new customer.”

“We can’t keep having CRB used like a toy…because lenders are not allowed to give positive or negative information to CRB,” Mutiso stated.

He cautioned that the wrong moves could drive investment away from the fintech and digital lending sector. The sector has become a hot political topic with leaders including 2022 Presidential aspirant Mukhisa Kituyi and Central Organization of Trade Unions (COTU) Secretary-General Francis Atwoli calling for a crackdown on the sector for alleged exploitative practices.

‘’The challenge of unpredictability and politicisation of our industry will scare investors, make us not want to come up with new products or get new customers or leave the industry, taking the country back to 20 years,” the DLAK Chairman maintained.

READ>>Fuliza: Safaricom’s Golden Goose Opens Political Battlefront

 

Written by
MARTIN SIELE

Martin K.N Siele is the Content Lead at Business Today. He is also a Quartz contributor and a 2021 Baraza Media Lab-Fringe Graph Data Storytelling Fellow. Passionate about digital media, sports and entertainment, Siele also founded Loud.co.ke

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