The Central Bank of Kenya (CBK) has given all digital lenders in Kenya until September 2022 to apply for new licenses.
Following the revision of Kenya’s Central Bank (CBK) Act, the Central Bank was given the legal mandate to regulate and supervise operations of digital lenders including punishing those that violate consumer privacy.
In 2021, the CBK Governor had indicated that it was looking to take control of the sector following reports of malpractices and abuses by lenders.
Some of the issues observed about digital lenders include:
- High interest rates
- Over-indebtedness
- Unethical collection practices
- Personal data abuse
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The amended 2021 Central Bank Act gives the Central Bank of Kenya authority to license digital lenders in the country and ensure the existence of fair and non-discriminatory practices in the credit market.
The CBK Governor also boasted about its recently launched National Payments Strategy which he said is the most consumer-friendly in the world. Launched in February 2021, the National Payments Strategy is billed as the blueprint for how the country will consider adoption and application of new financial technologies.
As part of the new regulations, the Governor also revealed that the apex bank will require all Payments Service Providers to put in place a working customer complaints system.
According to reports, there are more than 120 digital lending platforms operating in Kenya.
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RECOMMENDED READING: [VIDEO] A Chat with Kevin Mutiso – CEO, Alternative Circle – A Digital Mobile Money Lending Service in Kenya
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