More Africa NewsKenya: Central Bank of Kenya reins in digital lenders

March 23, 2022by myles0

The Central Bank of Kenya (CBK) has been empowered to regulate micro digital lenders in a bid to stop malpractices that continue to plague the industry.

CBK released a statement which reads in part: “The regulations seek to address concerns raised by the public given the recent significant growth of digital lending, particularly through mobile phones. These concerns relate to the predatory practices of the previously unregulated digital credit providers, and in particular, their high cost, unethical debt collection practices, and the abuse of personal information.”

The regulations also cover consumer protection, credit information sharing, and outline the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) obligations of DCPs.

Under the regulations, digital lenders will ensure that personal information is not used to ‘loan shame’ defaulters. This includes using threats and violence, accessing the customer’s phone book or contact list and other phone records for purposes of sending them messages in the event of untimely payment or non-payment.

All digital lenders are expected to be compliant in six months of the publication of the regulations, according to the Central Bank.

Kenyan law firm TrippleOKLaw said, “This calls for digital credit providers to move swiftly to ensure compliance within the stipulated timelines. CBK has already issued draft regulations that govern digital credit providers. We anticipate that there will be further regulations rolled out to give force to the Act.”

The firm added, “With this new legislative enactment and regulations, we anticipate a paradigm shift in the operations of a majority of digital lenders to conform with the requirements. Some of the changes we anticipate include robust compliance frameworks, changes in corporate structures, product design changes and regular regulator engagements.”

Source: IT Web Africa

Leave a Reply

Your email address will not be published. Required fields are marked *

© Copyright Extensia Ltd