World Bank concerned after order to remove TBEN from CRB


The World Bank Group (WB) has accused the Central Bank of Kenya (CBK) of its directive to allow TBEN with loans of less than Ksh5 million to withdraw from the Credit Reference Bureau (CRB).

In a report titled Fintech and the future of financethe global financial group noted that the move was not only ineffective but also put lenders at risk.

The World Bank explained that the directive hindered financial institutions from accessing the credit score of potential borrowers.

“For example, the popularity of mobile money in Kenya has led to wider financial inclusion, as well as the blacklisting of numerous borrowers for nano-loan defaults under ksh1200 ($10).

Former President Uhuru Kenyatta and former First Lady Margaret Kenyatta at Kasarani Stadium on Tuesday, September 13, 2022

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“One of the Kenyan regulator’s responses has been to prevent mobile lenders from registering defaults with the credit bureau. This can be ineffective and hurt both digital and conventional lenders who want to understand a potential borrower’s full debt burden without the issue of suitability. the product,” read the report in part.

Furthermore, the World Bank acknowledged that digital borrowing had become commonplace in the country that was given access to mobile borrowing applications. However, the financial group stressed that default on loan repayment is still a major challenge.

This was explained by the fact that a majority of borrowers did not understand the terms set by digital lenders.

“While digital microcredit has increased access to credit in some emerging economies, countries such as Tanzania and Kenya have seen large numbers of borrowers fail to repay their loans due to irresponsible lending practices,” the global financial institution said.

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The 2022 report referred to CBK’s directive issued in November 2021 following orders from former President Uhuru Kenyatta during Mashujaa Day celebrations last year.

At the time, Uhuru ordered the directive to take effect for a year, explaining that the move would allow micro, small and medium-sized enterprises (SMEs) to access credit in their post-global pandemic recovery plan.

The listing of TBEN on CRB was one of the key issues that dominated campaigns ahead of the August 9 polls.

Notably, during his maiden speech at his inauguration on September 13, President William Ruto also revealed that his administration was in discussions with CBK about the CRB listing.

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“Financial inclusion and access to credit are critical in addressing the fundamentals of the cost of living, job creation and people’s well-being. We will take steps to reduce credit costs.

Korir Sing'oei watches as President William Ruto signs the nomination of six judges to the State House Court of Appeals on Tuesday, September 13, 2022.

Korir Sing’oei watches as President William Ruto signs the nomination of six judges to the State House Court of Appeals on Tuesday, September 13, 2022.

President William Ruto

Our premise is to shift the framework of the Credit Reference Bureau (CRB) from its current practice of arbitrary, punitive, and all-or-nothing blacklisting of borrowers,” the president announced.

According to statistics from multiple financial websites, more than 14 million TBEN are said to have been blacklisted by CRB.


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