The Central Bank of Kenya (CBK) seeks to regulate mobile lending loan rates in a new bill proposed to parliament. It’s part of the Central Bank of Kenya (Amendment) Bill, 2020.
The bill seeks to “amend the Central Bank of Kenya Act to regulate the conduct of providers of digital financial products and services.” Through the bill, “the Central Bank of Kenya will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”
If the bill becomes law, the CBK will cede control of Kenya’s unregulated digital lending industry which has been criticized over predatory pricing, misuse of customer data, abusive debt collection practices, among other things.
A report from the Center of Financial Inclusion on the state of the digital consumer credit market in Kenya documented the “rapid growth” in mobile lenders and “alarming levels of defaults and delinquency”.
It’s no secret, there are very many loan apps in the country. After the CBK barred loan apps from accessing the credit reference bureau (CRB), Standard Media listed a total of 64 loan apps.
The new bill will, among other things, let the CBK control the lending rates, and other charges associated with digital lending.