The Central Bank of Kenya under the Central Bank of Kenya (Digital Credit Providers) Regulations 2022, has instructed all digital lenders across the country to get a license or wind down their operations by September, 2022. The Bank, being the monetary regulator has made it mandatory for all digital lenders to adhere by specific rules.
Digital Credit Providers shall no longer operate in the dark with their customers, in as far as issues interest rates and code of ethics are concerned. Rule 4 (3) and 27 (2) have made it compulsory for the digital lender to furnish its members with their annual interest rate for the specified loan, total cost of credit, and customer complaint handing channels. These terms and conditions are to be presented to the customer in a clear, simple, and easily accessible format and language. To further protect the consumer, digital lenders have been warned against misrepresentation or sharing deceptive facts to clients. These protective measures have been set to ensure the consumer is aware of any monetary “trap” they get into.
The Regulations have further cured the never-ending menace of digital lenders sharing customer’s information with third parties, and accessing their customers phonebooks. Rule 20 (a-g) come out to warn digital lenders from harassing, oppressing and abusing their customers. This comes after several consumers complained of digital lenders calling their relatives with threats, aimed at embarrassing them. Rule 20 (e) specifically cushions digital lenders against “make unauthorized or unsolicited calls or messages to a customer’s phone contacts and other contacts.
The new regulations have gone ahead to set up steps on how a digital lender shall report to credit reference bureaus, upon default by a client. Prior to reporting, the lender is now required to give a customer a 30 days’ notice. In the current rules, lenders have been barred from forwarding names of borrowers to CRB on loans below Ksh. 1,000 under Rule 14 (3).
The set of new regulations come in after President Uhuru Kenyatta assented to the Central Bank of Kenya Act in December. With the new law, the CBK was mandated to issue digital lenders with licenses to create a fair and non-discriminating practice within the credit market, and to create order in a chaotic sector.
