On 7th December 2021, Parliament enacted The Central Bank of Kenya (Amendment) Act of 2021 effectively providing the Central Bank of Kenya (CBK) with the powers to license and oversight the previously unregulated digital credit providers.
This was a timely regulation as the uptake of digital loans in Kenya has been on a steady rise over the years as borrowers have been able to access credit at the touch of a button through user friendly mobile applications.
However, a great deal of digital borrowers in Kenya have accused digital lenders of predatory practices such as aggressive debt collection and personal data abuse. Parliament sought to curb the so-called predatory practices while still enabling digital lending in a fair and regulated space by enacting said law. We discuss the new changes introduced by this law and what this means to digital credit businesses.
This article is extremely helpful to digital credit providers, who want to understand the impact of this Act on digital credit businesses and the Kenyan digital lending market. We debunk the compliance requirements, which include licensing, pricing of digital credit, supervision of digital credit providers, Anti-Money Laundering requirements, to name a few. This article is also important because it highlights practical steps businesses can take towards compliance noting that digital credit providers must comply with the Act by 7th June 2022. We hope that this article inspires best practice in digital credit operations while incorporating the necessary legal industry controls.
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