The Central Bank of Kenya (CBK) has vowed to protect Kenyans against predatory lending from digital money lenders.
This is following a concern that members of the public may sink into lending during the festive season and resumption of schools come January 2021.
Despite the CBK (Amendment) Bill 2020 not having been passed, the regulator has issued undisclosed actions against the digital lenders to help curb customer exploitation.
The proposed bill seeks to curb the steep digital lending rates that have exposed many borrowers to debts and predatory lending.
The bill is currently before Parliament and is unlikely to be ready before April 2021 thus raising concerns on lending from the loan apps without any regulation.
Yesterday, CBK governor Patrick Njoroge told the Senate finance and budget committee that they are Keen to protect Kenyans from unfair lending practices before the adoption of the proposed law.
The bill if passed will place the digital mobile lenders under the watch of the regulator.
He has promised to find out the life cycle of the Bill by knowing the time that the National Assembly has before the CBK can make any decision.
“Chances are that the processes involved will not allow the bill to be out before April, ” he said
“But we have the festive celebrations and schools reopening around the corner which has raised concern,” said Dr. Njoroge.
Once the bill is passed, the digital mobile lenders will have to seek approval from the CBK before increasing monthly interest rates.
The regulator will also be in charge of borrowers’ non-performing loan approval.
The new bill also seeks to expand the role of the Central bank to license and regulate the micro-lenders.
According to the proposed law, digital money lenders have been operating against the regulations since they are not recognized financial institutions.
The MPs also asked the CBK to regulate banks’ mobile loans which they now claim are expensive.