Kenya has made progress in its quest to regulate digital lenders after a parliamentary committee approved a Bill giving the Central Bank power to regulate them following complaints from borrowers.
The Central Bank of Kenya (CBK) Bill, approved for tabling on 5th August 2021, went through the first reading on 11th May 2021 and was committed to the Departmental Committee on Finance and National Planning for review and report to the House. It was published on 6th April 2021.
This Bill has seven clauses and seeks to amend the CBK Act to provide the licensing of digital lenders, now not regulated by any other law.
Digital lenders have no legal framework
According to Gladys Wanga, Chairperson of the Departmental Committee on Finance and National Planning in parliament, there is no legal framework governing digital borrowing platforms. As such, the CBK will be obligated to ensure fair and non-discriminatory access to credit.
Licensing of digital lenders is necessary for ensuring that they are adequately regulated,” the committee said.
The committee has explicitly granted CBK the powers to determine pricing parameters. This will ensure that CBK does not necessarily set the lending rate but rather provide parameters within which digital credit providers shall set their cost of credit.
The committee agreed to delete the provision giving CBK powers to approve business models as this will create unnecessary hurdles, and digital lenders must be allowed space to innovate.
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