The Central bank of Kenya has issued a six months’ ultimatum to digital lenders to apply for licenses by September deadline or risk closing shop.
CBK Governor Patrick Njoroge said that the regulations for Digital Credit Providers (DCPs) are ready and will be gazetted this month in a bid to oversight lenders that have been famed for giving loans with very high-interest rates and thus leaving a majority of Kenyans with huge debt.
“The regulations will be gazetted later this month to pave the way for the licensing and oversight of digital credit providers by CBK,” said Njoroge.
He spoke during the commemoration of World Consumer Rights Day.
“All previously unregulated DCPs will be required to apply to CBK for a license within six months of the publication of the regulations, that is by September 2022, or cease operations. We are now in business,” he said.
The application fee for the digital lenders will be at a flat rate of Sh5000 and an annual license fee of Sh20,000; however, questions have arisen over if the regulator shall be barring the lenders from blacklisting defaulters up to Sh1000.
CBK has proposed an Sh500,000 fine on digital lenders who use threats, violence or other criminal means to physically harm the person, reputation or property when collecting debts.
Digital lenders will also not be allowed to use obscene or profane language or make “unauthorised or unsolicited calls or messages to a customer’s contacts” in the name of recovering defaulted loans.
CBK also wants to bar digital lenders from charging interest that exceeds the principal owing when a loan falls into default.
