Kenyans looking into borrowing money from digital money lending Apps will have to look for other options after the lenders cut down the number of loans.

According to The Digital Lenders Association of Kenya (DLAK), they have stopped taking onboard new borrowers to lower the risk due to a lack of credit history.

“We are now only lending to returning borrowers with good repayment profiles. Currently, we are lending to only two million people per month compared to a high of four million before October 20,” DLAK chairman Kevin Mutiso said.

The move follows a recent announcement by the Central Bank of Kenya that borrowers with loans under KSH5 million will not be blacklisted at the Credit Reference Bureaus (CRBs) a bid to cushion businesses recovering from Covid-19 disruptions, in line with a directive by President Uhuru Kenyatta.

Mutiso further said that digital lenders have experienced significant defaults in the last weeks following the announcement.

A survey by DLAK shows the loan book for its 25 members has shrunk by almost 60 percent to Sh1.5 billion per month from Sh4 billion.

Digital Lenders are the most preferred source of credit for many Kenyans (655%) according to the survey.

Central Bank had warned that commercial banks could restart rationing loans following the suspension of blacklisting of defaulters with Sh5 million loans and below.

CBK Governor Patrick Njoroge early this week warned that banks may shun lending to individuals and small traders at a scale last witnessed between September 2016 and November 2019 when Kenya capped interest rates.

President Uhuru Kenyatta on October 20 announced the suspension of CRB listing for loans that were defaulted from October last year, with the relief set to last till September next year.

CBK Suspends CRB Listing for Loans Below Sh5M