The Central Bank of Kenya (CBK) has made known its plans of acting against digital lenders in a bid to protect Kenyans from predatory lending ahead of Christmas and the resumption of schools.
CBK governor Patrick Njoroge on Tuesday told Parliament that the regulator is keen to cushion Kenyans from the unfair lending practices. These efforts come before the adoption of a proposed law that places the digital lenders under the watch of the baking regulator.
However, the law will not be ready for the next few months, prompting concerns from MPs about increased predatory lending during the festive season. The same is expected to happen in January as schools get to open after being shut on March in the wake of the pandemic.
“There is a chance we will not get the Bill into law before April, but we also have Christmas and schools re-opening,” Dr Njoroge told MPs.
“We will find out on the life cycle of the Bill by knowing the time they (National Assembly) have envisaged then we will talk [as central bank] and see what we can do.”
According to the CBK, the main aim of the Central Bank of Kenya (Amendment) Bill, 2020 is to curb the steep digital lending rates that have plunged many borrowers into a debt trap as well as predatory lending.
This development comes about a week after the regulator chose to not extend the six-month suspension for listing loan defaulters with credit reference bureaus (CRBs).
“For those loans that went into arrears after that date (April 1), the period for determining their performance begins on October 1, 2020. If a loan is in arrears after 60 days from October 1, a financial institution will, in accordance with the existing procedures, give the borrowers notice of the intention to list them with the CRBs,” the CBK said in a statement.