Digital lenders who reveal personal data of loan defaulters risk a permanent ban after the Head of State, President Uhuru Kenyatta, assented the Central Bank of Kenya (Amendment) Bill into law.
This comes after President Uhuru Kenyatta signed three parliamentary bills into law during a brief signing ceremony event held at the statehouse, Nairobi on Tuesday, December 7.
According to the amended Central Bank Act 2021, digital lenders who breach the confidentiality of personal information risk permanent ban and revocation of their permits by the banking regulators.
The law is to help curb the common debt shaming trend by digital lenders in a bid to recover their loans.
As stated by reports, digital lenders through debt collection agents, pursue borrowers by using contact information scraped from their mobile phones to reach out to their friends and family while some threaten to report them to their employers.
“The bank may suspend or revoke a license by written notice to the holder of the license if the licensee (digital lender) is in breach of subsection (2A) or the conditions of the Data Protection Act or the Consumer Protection Act,” reads the Bill.
In addition, digital lenders will be required to disclose their full fees and penalties following concerns over not revealing full information on punishment for defaults, pricing, and the recovery of unpaid loans.
Lobbies that had petitioned Parliament during the review of the Bill had stated that loan applications are private affairs that should be treated as confidential information.
The amended Central Bank of Kenya Act ,2021 has granted the Central Bank of Kenya powers to supervise digital lenders, license them, and ensure the existence of fair and non-discriminatory practices in the credit market.
In the brief signing ceremony attended by National assembly speaker, Justin Muturi, his senate counterpart Ken Lusaka, Treasury Cabinet Secretary, Ukur Yatani, and the head of Public service, Joseph Kinyua, President Kenyatta signed the public-private partnership Act and the trustees' amendment bill.