Juja Member of Parliament Francis Munyua has sponsored a bill seeking to amend the law to compel creditors to first exhaust options of recovering a loan from the principal borrower before going for guarantors.
This could be a huge blow to loan recovery efforts by Saccos, most of which target guarantors in case a borrower defaults.
Most often, individuals have lost their assets to credit lending institutions like Banks, Saccos and Microfinance institutions on account of acting as guarantors to borrowers who later default.
This is buoyed by the current legal dispensation that provides for creditors to recoup their loans by seizing funds, savings, and assets of guarantors.
Under the proposed Law of Contract Amendment Bill 2019, sponsored by Munyua, guarantors would be cushioned from penalties and confiscation of assets over bad debts if the legislation is enacted into law in its current form.