The Central Bank of Kenya (Amendment) Bill 2021 seeks to regulate the digital money lending business and offer stiff penalties to rogue players in this space.
This Bill has already been introduced in parliament by Gladys Wanga- Chairperson, Departmental Committee on Finance and National Planning in parliament and published in a Special Issue of the Kenya Gazette, dated April 6th 2021.
The proposal, if passed by parliament, states in part that all unlicensed digital money lenders will attract imprisonment for a term not exceeding three years or to a fine not exceeding KSh 5 Million or both.
CBK spells out requirements for digital lenders
The Central Bank of Kenya will license all digital lenders and publish regulations concerning management requirements for digital credit providers.
CBK will also list all permissible and prohibited activities, anti-money laundering, and measures required to counter financing terrorism, allowing digital lenders to share credit information while protecting consumers’ data protection and privacy.
Cases are rife of some unscrupulous digital lenders accessing personal phone data, including ID Card No and portraits, salary or personal income information, and demanding an undisclosed processing fee, among other uncouth business behaviours.
CBK will also spell out reporting requirements for digital credit providers, offences and penalties, and other measures necessary for the regulation of digital lending.
Any Regulations required to be made under this Act, to give effect to the provisions on digital lending, shall be made within three months of the coming into force of this Act.
Before this law takes effect, any person who was in the business of providing credit facilities or loan services through a digital channel and is not regulated under any other law shall register with CBK within six months of coming into force of this Act.
The principal object is to amend the Central Bank of Kenya Act to provide for licensing of digital credit service providers, who are not regulated under any other law.
As matters stand, there is no legal framework governing digital borrowing platforms.
The CBK will have an obligation to ensure a fair and non-discriminatory marketplace for access to credit.
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