Digital lenders given until September to obtain licenses from CBK

NAIROBI, Kenya, March 16- All previously unregulated Digital Credit Providers (DCPs) will be required to apply to the Central Bank of Kenya (CBK) for a license by September 2022 or cease operations in Kenya.

Speaking during the World Consumer Rights Day, CBK Governor Patrick Njoroge has said that regulations governing Digital Credit Providers will be gazetted later this month to pave the way for the licensing and oversight of (DCPs) by the Central Bank of Kenya (CBK).

 In December last year, President Uhuru Kenyatta approved changes in the law that allowed the Central Bank of Kenya to regulate digital lenders giving CBK powers to rein in lenders who violate consumer privacy.

The CBK Governor Patrick Njoroge has said that the market regulator is in talks with financial service providers to ensure fairness in credit pricing.

“We have spoken to the payment service providers explaining to them that they cannot charge whatever they want, rather we will evaluate and be sure that the pricing is fair and affordable for the customer,” said Njoroge.

CBK has further urged Kenyans against registering on financial platforms that are not regulated by the bank.

Under the Central Bank of Kenya Amendment Act 2021, the digital credit providers will be required to have a valid license and any person who operates without a valid license will be liable to imprisonment for a term not exceeding three (3) years or to a fine not exceeding Kshs.5 Million or both.

Digital lenders must also obtain a Certificate of Registration from the Data Commissioner, prior to registration. This is to curb the abuse of personal information, which they receive in the course of business.

In an aim to further protect the consumers of digital lending services, the Act requires that a license application is accompanied with a statement as to compliance with the Consumer Protection Act.

Digital lenders are also required to disclose to the licensed Credit Reference Bureaus (CRBs) positive or negative information about their customers as reasonably required for the discharge of their functions. This will assist in building the credit history of the customers.

In addition to issuing, suspending and revoking licenses, the CBK also has the power to approve lenders’ digital channels and determine their parameters for pricing of digital credit.