Law Regulating Digital Lenders in Kenya Comes into Effect

The law now gives the Central Bank powers to license and oversee the previously unregulated digital credit providers who have been accused of charging very high interest rates and harassment of defaulters.

A law that allows for the licensing and supervising of digital lenders came into effect on December 23 following the signing of the Central Bank of Kenya (Amendment) Act, 2021, into law by President Uhuru Kenyatta on December 7.

The Central Bank of Kenya in a statement Thursday said “this is a significant milestone” while announcing the draft Digital Credit Providers Regulations.

“With the recent advances in technology and ongoing innovations, lending through digital channels, particularly mobile phones, has grown significantly in Kenya. However, concerns have been raised by the public about the predatory practices of the unregulated digital credit providers, and in particular, their high cost, unethical debt collection practices, and the abuse of personal information.” CBK said in an emailed statement sent to Khusoko.

The CBK is currently receiving public comments on the draft Regulations which are expected to be published by March 23, 2022.

“The Regulations provide for inter alia the licensing, governance, and credit operations of Digital Credit Providers (DCPs). They further provide for consumer protection, credit information sharing, and elaborate on the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) obligations of DCPs,” says CBK.

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