A newly proposed law now seeks to have digital mobile lenders a mandate to be licensed by the Central Bank of Kenya (CBK). If Parliament adopts this bill, the regulator will have control of these lenders’ products, management and sharing of borrowers’ information.
The main goal of the government-backed Central Bank of Kenya Bill, 2021, is to curb the harsh digital lending rates that have pinned borrowers across the country into debt traps and predatory lending. The bill is also aimed at empowering the banking regulator to supervise digital lenders operating in the country for the first time.
It will also be used to push out rogue players in this industry. This comes amid concerns of unethical practices such as money laundering, illegal mining of customer private data and shaming borrowers who default on payment.
The CBK will also be expected to determine minimum liquidity and capital adequacy requirements for digital credit providers akin to conditions set for operating a bank in Kenya.
It is quite evident that the regulator has been making efforts to protect Kenyans from predatory lending that leaves them in huge unplayable debts. This was proven when the CBK ordered the lenders to stop listing loan defaulters into CRBs.