Central Financial institution of Kenya points new guidelines to digital lenders, provides September deadline for licence utility
The 30-paged regulatory document, which was published earlier this month and has been obtained by Business Insider Africa, introduces new rules and some sweeping changes aimed at sanitising the Kenyan digital lending space.
Among the new rules is that all previously unregistered digital lenders must meet a September deadline to obtain their licenses or risk being shut down.
Also, the new regulatory framework prohibits digital lenders in Kenya from sharing their customers’ data with third parties, even as they are also required to seek the approval of Kenya’s apex bank before increasing their interest rates.
The CBK noted that the need to regulate the banking sub-sector became imperative following numerous complaints of predatory lending and other abhorrent practices exhibited by some of the loan sharks.
“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 provide for inter alia the licensing, governance, and lending practices of DCPs. They also provide for consumer protection, credit information sharing, and outline the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) obligations of DCPs,” the CBK said in a statement that was issued on its website.
It should be noted that Kenya is not the only African country that has recently taken steps to curtail the activities of digital lenders.
Recall that Business Insider Africa recently reported that Nigeria has also intensified its crackdown against illegal and unscrupulous lenders who have been accused of excessive rights violations and unfair practices.