Banks cut digital lending to customers in the wake of a rise in non-payment following the six-month freeze on listing defaulters with credit reference bureaus (CRBs).

KCB Group, Equity, and NCBA all reported that they had slowed down digital loans to avoid higher defaults in the wake of listing freeze that lasted between April 1 and end of September.

The lenders say listing relief that was offered by Central Bank of Kenya (CBK) reduced the motivation of customers to repay the loans, which are mostly taken for consumption.

KCB chief executive Joshua Oigara says the lender was initially disbursing about Sh10 billion per month, but the listing freeze saw it cut the lending to below Sh5 billion.

“Without the ability to list anybody on the CRB, then there was no motivation for the customers to pay. This was a very difficult measure and it contributed to us reducing the lending,” says Mr Oigara.

“Our levels of non-performing loans for this product increased from two per cent to 15 per cent in the second and third quarter of the year.”

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