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Good News For Kenyan Digital Borrowers As New Act Grants CBK Authority to Monitor Mobile Lenders

On Tuesday 8th December, 2021at state house Nairobi, President Uhuru Kenyatta signed into law the Central Bank Bill, 2021 in legal changes putting digital lenders under the watch of the banking regulator for the first time Kenya.

The Central Bank of Kenya (CBK) have been granted authority to control the interest rates of mobile digital loans and ban lenders who will be sharing personal data of defaulters. The new law is seeking to protect Kenyan borrowers from predatory lending.

The 2021 CBK Act, directing lenders to seek approval of the central bank before pricing their loans and products, subjecting them to the same rules as commercial banks.

In case of violation of the new law by the digital lender, the Act grants the banking regulator powers to revoke the permits, mostly those who breach the confidentiality of personal information to pursue defaulting borrowers.

President Uhuru Kenyatta.

The Act is here to dame the behaviour where some lenders resort to “debt shaming” tactics to recover debts.

Of late debt collection agents have been reported threatening defaulters by reaching their friends, family members, and even employers through contact information scraped from their phones database.

The Mobile lenders have obligation to disclose charges before issuing a loan the any borrower. CBK rules out setting mobile loan rate caps.

As per the new Act, borrowers have the right to know full information regarding the loan before borrowing. Digital lenders have been accused of not disclosing full information about the loans.

“The amended Central Bank Act, 2021, gives the Central Bank of Kenya powers to license digital lenders in the country as well as ensure the existence of fair and non discriminatory practices in the credit market,” read State House statement.

Interest rates for mobile lenders will now be set within brackets of rates approved by the CBK. This is in an effort to protect Kenyan borrowers against predatory lending that has thrown many into debt nightmares.

Content created and supplied by: StdNewsKenya (via Opera News )

CBK CBK Act Central Bank of Kenya Kenyan Nairobi

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