Relief for M-Shwari defaulters as CRB listing suspended

Distressed borrowers on NCBA Group #ticker:NIC-owned mobile lending platform, M-Shwari, have been handed a month’s relief on late payment penalty.

This is as a result of economic effects of measures Kenya has taken to contain the spread of coronavirus in the country.

Borrowers on the platform, powered by Safaricom’s #ticker:SCOM M-Pesa, will not be charged additional 7.5 percent fees if they roll over debt to the following month, NCBA and Safaricom said in a joint statement on Thursday.

President Uhuru Kenyatta on Wednesday 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.

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 clear which framework NCBA will use to share credit history data for defaulters after 90 days if the CRB regulations are suspended.

“We would like to urge customers to be responsible with the credit solutions to ensure that as a collective we care for each other during this tough time,” NCBA Group chief executive John Gachora said in the statement. “The bank shall through M-Shwari, continue to responsibly support all customers through this difficult period.”

Mshwari, the country’s first mobile lending app launched in 2012, is one of the largest source of instant short-term credit for families and micro and small-sized businesses, repayable within a month.