A new bill was on Wednesday, November 13, tabled before the National Assembly seeking to revolutionise the money borrowing sector by expanding penalty scope to within the lending space.
The Business Law(Amendment) Bill 2024 will particularly target stakeholders in the financial sectors cutting across consumers to institutions and Credit Reference Bureaus.
Key among the target institutions include the Credit Reference Bureaus(CRBs), financial institutions, or any other persons who will refuse to comply with financial guidelines issued by the Central Bank of Kenya(CBK).
The bill stipulates hefty fines for Kenyans who will be found to have failed to adhere to the regulations by fining them up to Ksh1 million.
''The penalties prescribed under subsection (2) shall not exceed twenty million shillings in the case of an institution or credit reference bureau, or three times the gross amount of the monetary gain made or loss avoided by the failure or refusal to comply whichever is higher; and three million shillings in the case of a corporate entity and one million shillings in the case of a natural person,’’ the bill reads in part.
Should the National Assembly pass the bill, CRBs and financial institutions who do not follow directives issued to them by the CBK will be fined Ksh20 million. This is particularly important as the CBK has been blaming some of the institutions for sharing the private data of the customers contrary to data protection laws.
Alternatively, the institutions will be fined 3 times more of the money that they will have made as a result of not following directives issued by the CBK regarding the financial sector regulations.
Corporate entities that will be found to have failed to follow the provisions of the amendment will be fined Ksh3 million.
According to documents presented before the National Assembly, the new proposals will seek to amend section 55(2) of the Banking Act.
''The Bill seeks to amend section 55(2) of the Banking Act to provide for penalties against institutions, credit reference bureaus or any other person who fails or refuses to comply with any provision of the Act, Prudential Guidelines and directions issued by the Central Bank of Kenya and the Act or Prudential Guidelines,’’ the documents read in part.
Initially, individuals who violated such agreements were fined Ksh10,000, while institutions and CRBs parted with up to Ksh1 million in penalties.
''The Minister may make regulations generally for carrying out the purposes and provisions of this Act. (2) Without prejudice to the generality of subsection (1), the Minister may, in regulations, prescribe penalties to be paid by institutions or credit reference bureaus that fail or refuse to comply with any directions of the Central Bank under this Act, which shall not exceed one million shillings in the case of an institution, or credit reference bureau, or one hundred thousand shillings in the case of a natural person, and may prescribe additional penalties not exceeding ten thousand shillings in each case for each day or part thereof during which such failure or refusal continues,'' the previous provision stipulated.
