Parliament’s Finance and National Planning Committee has approved the Central Bank of Kenya (Amendment) Bill 2021 which seeks to regulate digital lenders.
According to a clause that gives by the CBK ,powers to price interest rates for digital loans was added.
Rogue actors who use debt shaming as a way of collecting payments and actors who use debt shaming as a way of collecting payments will be curbed.
The bill also seeks to ensure that CBK controls products that are put out by the digital lenders and also data from the borrower.
The Digital Lenders Association of Kenya (DLAK) said the proposed law will help in curbing rouge actors in the sector who have tarnished its reputation.
DLAK chairman Kevin Mutiso stated, “This is good news for the sector. This will see rouge actors tamed and more importantly the CBK will provide guidelines that will see proper pricing in the sector.”
Lenders will face serious consequences if they fail to comply with the new regulations once they are passed.
“Rogue actors will have a very hard time operating. If they breach the regulation this will see the company and its directors taken to court , fined and also some might lose their positions,” Mutisi added.
Upon receipt of application documentation, the Central Bank will have up to 30 days to either issue a license to a fintech or notify them of the decline in approval.
Since fintech lenders are not deposit-taking, the bill has also dropped any minimum capital requirements.
The provision to CBK powers to approve business models was however deleted by the commission to allow digital lenders space to innovate.
The DLAK chairman stated, “When the law is passed this will see many of the lenders focus on specific sectors when it comes to lending.”
Steep digital lending rates that have plunged many borrowers into a debt trap as well as predatory lending and unethical debt collection tactics are the vices that some of the digital lenders have been accused of thereby instigating the drafting of the regulations.
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