Popular mobile loan app "Branch" has received regulator approval to buy majority shares in Century Microfinance Bank Limited.
A gazette notice dated Friday, May 7 indicated that Branch International Limited had been authorised to take up 84.89% of the issued share capital in Century Microfinance Bank Limited.
"Pursuant to the provisions of section 46 (6) of the Competition Act, 2010, it is notified for general information that in exercise of the powers conferred upon the the Competition Act, the Competition Authority has authorised the proposed transaction as set out," reads an excerpt of the gazette notice.
One of the conditions set is that the acquirer and the target will each maintain the terms agreed with the borrowers in respect of all loans existing in their loan books at the time of the acquisition.
Additionally, the acquirer and the target will each retain their existing performing and non-performing loans in accordance with their terms up to and until the expiry of such loans so long as the said terms are not in contravention of the provisions of the Competition Act No.12 of 2010.
The move is a strategic shift towards the formal lending sector. The decision came a month after parliament cleared a bill seeking to to regulate mobile loan rates and treatment of defaulted credit to protect borrowers from predatory lending.
Branch is one of the most popular apps in Kenya on the Google Play Store while Century Microfinance Bank is a microfinance institution that specializes in providing financial services to micro, small and medium businesses. Century Microfinance Bank was licenced by the Central Bank of Kenya as a deposit taking microfinance institution in 2012 to provide a full range of financial services such as savings account and credit facilities.
The Central Bank of Kenya (CBK) currently regulates banks and micro-lenders.
The proposed changes grant it supervisory and licensing powers to oversee hundreds of digital lenders operating in the country.
“The proposed amendment seeks to achieve the following objectives, prohibit any person, institution or firm from lending money to Kenyans unless licensed by the Central Bank of Kenya,” a notice by Gideon Keter indicated.
