The Central Bank of Kenya (CBK) is set to regulate all digital money lenders’ activities.
This is as soon as the Central Bank of Kenya( Amendment) Bill 2020, currently, before the National Committee on Finance and Planning, is debated and passed approved by Members of Parliament.
On the radar of CBK are entities that offer credit facilities in the form of money lending applications.
CBK Act amendment
The principal object of this Bill is to amend the CBK Act Cap 491 to protect consumers of services offered by digital money lenders.
Cases are rife where rogue digital lenders fail to fully disclose their loans’ total cost, including penalties for delayed repayments.
Others use legal firms to threaten borrowers who default while accessing their contacts on the mobile phone and making calls without the borrower’s consent. Most operate in a shylock behaviour, hidden behind appealing Apps and hype.
The Bill, proposed by MP Gideon Keter, seeks to expand the role of CBK to license and regulate all persons, institutions or firms lending cash to Kenyans.
No person shall transact business as a digital money lender unless the Central Bank of Kenya licenses the person to operate as such.
The list of all licensed digital lenders shall be published in the Kenya Gazette to separate them from illegal operators.
The proposed law requires every digital money lender to expressly announce its interest rates when advertising for its services.
The credit market is awash with unregulated digital lenders, out to make a buck from the massive demand for credit.