President Kenyatta has signed into law the Central Bank Amendment Bill, 2021.
The development means that the CBK has the power to tame various parts of online lending, including loan apps that have terrorized Kenyans because of their punitive rates and aggressive loan recovery methods.
The CBK has also been given powers to determine the interest rates of online loans.
However, it should be noted the regulator will not necessarily set the lending rate but will give lenders a pricing parameter for the loans.
The principal object of this Bill is to amend the Central Bank of Kenya Act to provide for licensing of digital credit service providers, who are not regulated under any other law. The current position is that there is no legal framework governing digital borrowing platforms. As such, the Central Bank of Kenya will have an obligation of ensuring that there is a fair and non-discriminatory marketplace for access to credit – The CBK Amendment
The law will also see the enforcement of the follows:
- license digital credit providers
- determine capital adequacy requirements for digital credit providers
- determine the minimum liquidity requirements for digital credit providers
- approve digital channels and business models through which digital credit business may be conducted
- supervise digital credit providers
- suspend or revoke a license
- direct or require such changes as The Bank may consider necessary.
This law has taken a long time to arrive, but we are glad it is here finally. To this end, also, lenders will no longer abuse personal customer data like calling their contact list in a loan recovery effort because doing so will see them lose their license.
You can read further details about the bill here.
