Regulatory Alerts2022-11-14
Banking Circular No. 4 of 2022 - Credit Repair Framework
The Central Bank of Kenya has approved a Credit Repair Framework for commercial banks, mortgage finance companies, and microfinance banks to offer to eligible borrowers with mobile phone digital loans. This framework aims to improve the credit standing of these borrowers whose loans are non-performing and have been reported as such to the Credit Reference Bureaus (CRBs). Under this framework, institutions will update the status of these borrowers from non-performing to performing in the CRBs after providing a discount of at least 50% of the amount outstanding. The borrowers covered in this framework are mainly in the personal and micro-enterprises sectors and were adversely impacted by the COVID-19 pandemic. The purpose of this circular is to guide institutions on eligible borrowers, risk classification, treatment in banks' books, implementation of the framework, and reporting to the Central Bank of Kenya (CBK). Institutions should have implementation plans that include a clear customer journey, communication strategy, and customer financial management awareness/sensitization. Institutions will report to CBK by the 10th day following each month regarding cumulative repayments and write-offs held.