Kenyans can now rest easy after the Central Bank of Kenya (CBK) barred digital lenders from harassing borrowers and their extended contact list with calls.
In a statement released on Monday, March 21, the regulator announced that it had published regulations to tame the lenders from unorthodox practices by some Digital Credit Providers (DCPs).
The regulations check the high costs transferred to borrowers as well as unethical debt collection methods and the abuse of personal information.
CBK took action against the lenders in the unregulated industry following an uproar from a section of the public, who felt like the lenders had crossed the line.
"The Regulations seek to address concerns raised by the public given the recent significant growth of digital lending, particularly through mobile phones. These concerns relate to the predatory practices of the previously unregulated digital credit providers, and in particular, their high cost, unethical debt collection practices, and the abuse of personal information.
"The Regulations provide for inter alia the licensing, governance, and lending practices of DCPs. They also provide for consumer protection, credit information sharing, and outline the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) obligations of DCPs," read the statement in part.
The lenders were further directed to re-apply for licenses in a period of six months lest they are kicked out of the marked.
"Consequently, in accordance with Section 59(2) of the CBK Act, all previously unregulated DCPs are required to apply to CBK for a license within six months of the publication of the Regulations, i.e., by September 17, 2022, or cease operations," added the statement.
A section of digital lenders have come under sharp focus for going after the relatives of borrowers in a bid to mount pressure as a debt recovery strategy.
In December 2021, President Uhuru Kenyatta, assented to the Central Bank of Kenya (Amendment) Bill barring digital lenders from revealing personal data of loan defaulters.
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 regulator.
The law is to curb the common debt shaming trend by digital lenders after years of push and pull, with some players having objected the regulations.
