The Central Bank of Kenya seeks to regulate digial loan rates if a proposed amendment is passed as law.
According to the Central Bank of Kenya (Amendment) Bill, 2020, the regulator seeks to regulate and supervise the conduct of digital financial products and services as well as the digital credit providers and digital credit service providers.
“The principal object of this Bill is to amend the Central Bank of Kenya Act in order to ensure that the Central Bank of Kenya regulates the conduct of providers of digital financial products and services and financial products and services,” it says on the Bill.
“The current position is that there is no legal framework governing digital borrowing platforms and other financial products and services. As such, the Central Bank of Kenya will have an obligation of ensuring that there is a fair and non-discriminatory market place for access to credit,” it adds.
If this bill is passed as law, the banking regulator will have to approve increases in digital lenders rates.
In February, the Central Bank and National Treasury said they were working on taming these lending apps. The Central Bank has moved swiftly to curtail the scourge of digital lenders preying on unsuspecting users in Kenya. In April, they denied digital lenders access to the credit reference bureaus which they used to report people who were unable to pay. This was preceeded by Google’s move to impose restrictions on predatory loan apps on the PlayStore last year. These digital loan apps complied with Google’s guidelines at the beginning of this year, but in a very cheeky way.
This war is far from over and we have to wait and see whether Parliament will pass the amendments proposed in this Bill.