The Central Bank of Kenya has approved 29 new digital credit providers, bringing the total number of licensed lenders to 281. This move is part of the regulator's push for compliance and consumer protection in the digital lending sector. The licences were granted under Section 59(2) of the Central Bank of Kenya Act. The approval was announced in a press release, highlighting the regulator's aim to ensure legal compliance and protect customers of digital lending services.
The latest approvals follow a July licensing round that added 25 providers, showing a continued expansion of the regulated market. Since March 2022, the CBK has received more than 900 applications for digital credit provider licences. The regulator reviews each application for business model soundness, consumer-protection measures, and the suitability of shareholders and managers. Several applicants remain at various stages of the approval process, with many still needing to submit outstanding documentation.
The Central Bank of Kenya has been urging pending applicants to provide the required documents promptly to enable completion of their reviews. Licensed digital credit providers typically deliver loans via USSD codes and other digital platforms, offering products such as education loans, short-term personal credit, asset financing, and business loans. The CBK's licensing drive responds to concerns about unregulated digital lenders, including high borrowing costs, aggressive debt-collection tactics, and misuse of personal data.
By August, the 281 licensed providers had issued 9,596,509 loans worth Ksh165.1 billion, according to CBK data. The regulator has been urging the public to report non-compliant operators. A recent Small Claims Court ruling in July affirmed that lenders operating without a CBK licence cannot enforce lending claims, reinforcing the regulator's licensing mandate. This move aims to protect consumers from unregulated digital lenders.
The CBK's efforts to regulate the digital lending sector have been ongoing, with a focus on ensuring that lenders operate in a transparent and fair manner. The regulator has been working to address concerns about the high costs of borrowing and the use of personal data by digital lenders. The licensing of new digital credit providers is expected to increase access to credit for Kenyans.
The digital lending sector has grown rapidly in Kenya, with many providers offering loans via mobile phones and other digital platforms. However, the sector has also faced criticism for its high borrowing costs and aggressive debt-collection tactics. The CBK's licensing drive aims to address these concerns and ensure that digital lenders operate in a responsible and sustainable manner.
The Central Bank of Kenya's approval of 29 new digital credit providers brings the total number of licensed lenders to 281. The regulator's efforts to regulate the digital lending sector are expected to continue, with a focus on ensuring compliance and consumer protection. The public is urged to report non-compliant operators to the CBK.
Key points
- The Central Bank of Kenya has licensed 29 new digital credit providers, increasing the total number of regulated lenders to 281.
- The regulator's efforts aim to ensure compliance and consumer protection in the digital lending sector.
- Licensed digital credit providers have issued 9,596,509 loans worth Ksh165.1 billion, according to CBK data.
