Central Bank of Kenya issues new rules to digital lenders, gives September deadline for licence application – Business Insider Africa

Business Insider Edition
The Central Bank of Kenya (CBK) yesterday informed digital lenders in the East African country that its new regulatory framework for Digital Credit Providers has taken effect.
The 30-paged regulatory document, which was published earlier this month and has been obtained by Business Insider Africa, introduces new rules and some sweeping changes aimed at sanitising the Kenyan digital lending space.
READ: This entrepreneur observed a serious lending gap when he visited Uganda. Now, his startup has raised $30 million to facilitate digital lending in the country
Among the new rules is that all previously unregistered digital lenders must meet a September deadline to obtain their licences or risk being shut down.
Also, the new regulatory framework prohibits digital lenders in Kenya from sharing their customers’ data with third parties, even as they are also required to seek the approval of Kenya’s apex bank before increasing their interest rates.
READ: Standard Chartered wants larger piece of Kenya’s booming retail banking space
The CBK noted that the need to regulate the banking sub-sector became imperative following numerous complaints of predatory lending and other abhorrent practices exhibited by some of the loan sharks.
“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. 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,” the CBK said in a statement that was issued on its website.
READ: Focus on Nigeria’s crackdown against unscrupulous and illegal digital lenders
It should be noted that Kenya is not the only African country that has recently taken steps to curtail the activities of digital lenders.
Recall that Business Insider Africa recently reported that Nigeria has also intensified its crackdown against illegal and unscrupulous lenders who have been accused of excessive rights violations and unfair practices.
READ: Amid fintech boom, report details how African banks can still gain an edge
Thanks for signing up for our daily insight on the African economy. We bring you daily editor picks from the best Business Insider news content so you can stay updated on the latest topics and conversations on the African market, leaders, careers and lifestyle. Also join us across all of our other channels – we love to be connected!
© 2022 africa.businessinsider.com

source