The Central Bank of Kenya (Amendment) Bill 2021 has been approved by Parliament’s Finance and National Planning Committee. The highlights of the proposed regulations include curbing steep digital lending rates, rouge actors who use debt shaming as a way to collect payments, and if it is passed will also control products that are put out by digital lenders along with data from borrowers.
According to the Digital Lenders Association of Kenya (DLAK), the proposed law will help in curbing rouge actors in the sector who have tarnished its reputation.
“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,” said Kevin Mutiso, Chairman, DLAK.
Failure to comply with the new regulations if passed will lead to action being taken against the lenders .
“Rouge 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,” added Mutiso
The bill has changed since the lack of minimum capital requirements would allow fintech lenders to operate without requiring funds, allowing for less regulation. In addition to this change, any company that applies for a license will have up until 30 days following receipt of their documentation before being notified either in approval or decline and must be allowed space to innovate while not having unnecessary hurdles put in front of them by government agencies such as CBK.
“When the law is passed this will see many of the lenders focus on specific sector when it comes to lending…,” added Mutiso.
The regulations come at a point when some digital lenders have been accused of unethical debt collection tactics and also curb the steep digital lending rates that have plunged many borrowers into a debt trap as well as predatory lending