CBK Ceases Operations of Digital Lenders In Kenya

CBK Ceases Operations of Digital Lenders In Kenya

Following the expiration of a Six (6) months licence registration deadline, The Central Bank Of Kenya (CBK) The CBK, has ordered the cease of operations of all the digital lending platforms which have not been registered, approved and given the licence to operate in the company. The approval is required as directed by the Digital Credit Providers.

In compliance with the regulations, it was expected that before the 17th of September all digital lending platforms should have applied for their licences from the CBK.

The announcement of the regulations comes after the Central Bank Act 2021, was signed into law in December last year. The Act brings all digital lenders under the operations of the CBK.

Bringing the fintechs under CBK is a result of raised concerns by the Kenyan public, some of the concerns are the abuse of obtained personal data, unprofessional debt collection methods, and high percentages of loans.

Digital lenders have been accused of also of not properly communicating the full details of the disbursed loans which could sometimes have high-interest rates, as high as 520% when calculated per year.

According to the latest regulations, money lenders do not have the right to disclose borrower’s data to third parties, likewise, they are meant to receive lending and interest approval from the CBK

in accordance, lenders are also compelled to reveal the terms of their loan procedure, and repayment patterns to the borrowers.

According to the statement released by the CBK, “Other applicants are at different stages in this process, largely awaiting the submission of requisite documentation. We urge these applicants to submit the pending documentation expeditiously to enable completion of the review of their applications.”

While giving the deadline in March of 2022, Patrick Njoroge, the CBK Governor made mentioned that the new regulation will usher in an organized setting into the lending industry.