The Central Bank of Kenya (CBK) says digital lenders could return to working with credit reference bureaus (CRBs) once they fall under its regulations.
Digital loans are growing both in number and size and their role in the economy cannot therefore be ignored.
These loans need to be properly priced and issued to the right borrowers and in appropriate sums to ensure sustainability to both the lender and the customer.
The Central Bank of Kenya (CBK) says digital lenders could return to working with credit reference bureaus (CRBs) once they fall under its regulations.
Digital loans are growing both in number and size and their role in the economy cannot therefore be ignored.
These loans need to be properly priced and issued to the right borrowers and in appropriate sums to ensure sustainability to both the lender and the customer.
Credit information sharing is one of the most powerful risk-management tools for microlenders who typically don’t take collateral from borrowers when issuing the short-term loans.
Without access to CRBs, digital lenders are struggling to know how much to lend and to who, elevating their risk of collapsing due to loan defaults.
But they should be ready to correct weaknesses such as erroneous negative listing of borrowers and misuse of customer data if they are to remain in business.
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