The Central Bank of Kenya has officially gazetted the digital lenders regulations paving way for their oversight and supervision.
The Regulations are now operational and are meant to provide for the licensing and oversight of previously unregulated Digital Credit Providers (DCPs).
“The Regulations seek to address concerns raised by the public given the recent significant growth of digital lending particularly through mobile phones. These concerns relate to the predatory practices of the previously unregulated digital credit providers, and in particular, their high cost, unethical debt collection practices, and the abuse of personal information.” read part of the statement to the press
“The Regulations provide for inter alia the licensing, governance, and lending practices of DCPs. They also provide for consumer protection, credit information sharing, and outline the Anti-Money Laundering and
Combating the Financing of Terrorism (AML/CFT) obligations of DCPs.” continued the statement
All previously unregulated DCPs are now required to apply to CBK for a license within six months of the
publication of the Regulations, i.e., by September 17, 2022, or cease operations.
In a move to protect the confidentiality of all digital credit seekers, CBK forbids lenders from sharing customer information with any other person except with the customer’s consent, or seek permission under any written law.
Recently, there has been increased complaints on digital lenders using agents to threaten customers in the course of debt collection and even debt shaming them for failing to repay their debts on time forcing a lot of people to shy away from the unregulated debt lenders.
Under the new law, lenders are no longer allowed to access the customer’s phone book or contacts list and other phone records for purposes of sending them messages in the event of untimely payment or non-payment as was the case before.
A lender who intends to furnish negative information about a customer to a bureau is now required to notify the customer of at least thirty days prior.
In efforts to control money laundering and combating the financing of terrorism, digital credit providers will provide to the Bank the evidence and sources of funds invested or proposed to be invested in the digital credit business and demonstrate that the funds are not proceeds of crime.
These are some of the regulations that CBK has enforced seeking to address public concerns given the significant growth of digital lending, particularly through mobile phones.