Kenya’s Central Bank Propose Law Change to Regulate Digital Lenders Loan Rates

Kenya’s Central Bank Propose Law Change to Regulate Digital Lenders Loan Rates

KCB Bank Group CEO and MD Joshua Oigara confers with Gikomba trader Robba Baba, during the launch of the pilot phase of Stawi - a mobile loan product targeting MSMEs

The Central Bank of Kenya (CBK) seeks to amend the Central Bank of Kenya Act to regulate mobile lending loan rates, in a bid to protect customers from unregulated mobile lenders.

The regulator through the Central Bank of Kenya (Amendment) Bill, 2020, seeks powers to supervise digital lenders.

If Parliament adopts the proposed changes, CBK will regulate the monthly interest rates that can be charged by digital mobile lenders and also put a limit on non-performing loans at not more than twice the defaulted credit.

“The principal object of this Bill is to amend the Central Bank of Kenya Act in order to ensure that the Central Bank of Kenya regulates the conduct of providers of digital financial products and services and financial products and services,” reads part of the Memorandum of Objects and Reasons.

According to the CBK, “The current position is that there is no legal framework governing digital borrowing platforms and other financial products and services. As such, the Central Bank of Kenya will have an obligation of ensuring that there is a fair and non-discriminatory marketplace for access to credit.”


In the past, Dr. Patrick Njoroge, Governor of Central Bank said “The fact that digital lenders are not regulated is a fundamental problem because there is no assurance that consumers are not being taken advantage of.”

“The fact that no regulator is monitoring them also means that there are money laundering risks because we don’t know where the money for onward lending is coming from and this is a major risk to the economy,” the governor said during the inaugural Afro-Asia FinTech Festival in 2019.

Currently, unregulated digital mobile lenders are barred from blacklisting the names of loan defaulters to credit reference bureaus (CRBs).

A 2019 report from the Center of Financial Inclusion on the state of the digital consumer credit market in Kenya recommended that “Both lenders and regulators consider adopting the digital credit standards and model regulations covering issues ranging from transparency to the fair use of algorithms, to protection of customer data.”