The Central Bank is
finally regulating digital mobile lenders. These mobile lenders can get really exploitative when it comes to getting back their money but it looks like they’re getting bumps on their roads.
CBK Regulates Exploitative Digital Lenders
Central Governor Patrick Njoroge had this to say…
“We have noted concerns on digital lenders on borrower indebtedness, financial integrity and consumer protection. Their rates are crazy and the way they deal with their customers is a concern,” Njoroge said.
Apparently there has been substantial public outcry over widespread misuse of the credit information-sharing mechanism by these lenders. This comes after the CBK Governor blocked lenders from blacklisting their loan defaulters to the Credit Reference Bureaus.
“We have more than 100 digital lenders and we don’t know the source of their money. Some of them could be laundering money and that is why we want to regulate them.”
The envisioned amendments will:
- Fix lending rates at a certain percentage.
- Provide standard guidelines on the handling of the borrowers.
We have been working on the amendments and we will regulate these entities the right way. They won’t be regulated like big banks but customers should expect to be treated with dignity,” he added.
According to the Star, the CBK boss said the Central Bank (Amendment) Bill, 2019, seeks to set out a regulatory framework for digital lenders. It will initially focus on digital lenders and then extend to all unregulated credit providers in the country.
They have lowered Central Bank rate from 7.25 to 7.00 per cent to signal banks to lower their interest rates to borrowers. Banks have been directed to provide relief to personal loan borrowers based on their individual circumstances arising from the Covid-19 crisis.