President William Ruto has cautioned borrowers who were previously listed with the credit reference bureaus against defaulting loans secured though Hustler Fund.
Speaking during the Wednesday launch of the Ksh 50 billion fund, President Ruto said access to the fund which will be through a *254# USSD code will be purely based on credit score of a borrower as opposed to collateral and will be non-discriminatory.
“Those of you who will be given a second chance, please do not abuse that second chance. Use it well it will work for you, it will work for your future, it will work for your business, it will work for your family,” said President Ruto.
According to data by the Central Bank of Kenya (CBK), there are 4.2 million Kenyans blacklisted with CRBs who owe an estimated Ksh.30 billion, equivalent to 0.8pc of the gross banking sector loan portfolio of Ksh.3.6 trillion as at the end October 2022.
However, under the six months Credit Repair Framework announced by the regulator earlier this month, borrowers have been given a discount of 50pc on the outstanding loans which should be cleared by May next year in order for them to have a good credit score.
“Today we are starting the journey to build a collateral system that is built on credit scoring. Every citizen can grow their credit scores; they do not have to own title or logbook. They can access credit if they work on their credit rating,” added the President.
The fund which has been clustered into three parts will have individuals borrow between Ksh 500 and Ksh 50,000, while groups will be able to borrow between Ksh 50,000 and Ksh 250,000.
SMEs and Co-operative Borrowing on the other hand will be able to borrow between Ksh 1 million and Ksh 100 million.
“We are asking all the beneficiaries of this fund to know that there is no free money in this country. What is there is a good facility that has no complications, that is available to ordinary people who cannot walk to any bank and get money,” added Deputy President Rigathi Gachagua.
All the loans will attract a 14 days grace period after which 8pc interest will be charged per annum.
“The biggest constrain and we all know is access to affordable credit. Today we are walking the journey as a nation to begin the journey to a single digit interest rate in the Republic of Kenya,” said the President.
In a bid to enhance Kenya’s gross savings ratio to GDP which is at a paltry 13pc, the government says 5pc of the borrowed sum will be retained as savings of which borrowers will be able to access 30pc within six months with the balance upon attainment of retirement age through the National Social Security Fund (NSSF).
Kenya’s rate of inflation has eased to 9.5pc in November from 9.6pc recorded last month on account of drop in prices of cooking oil, electricity, cooking gas and maize.
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