The Central Bank of Kenya (CBK) has licensed 29 additional digital credit providers (DCPs), increasing the total number of regulated lenders in the sector to 281. This move aims to ensure compliance with the law and protect customers using digital lending services. The licensing follows the legal framework under Section 59(2) of the Central Bank of Kenya Act. The CBK has received over 900 applications since March 2022 and is reviewing each based on factors such as business models and consumer protection measures.
The new approvals come after CBK’s earlier licensing of 25 digital credit providers in July, expanding the number of lenders under its oversight. The regulator assesses each application by evaluating factors such as the firms’ business models, consumer protection measures, and the suitability of proposed shareholders, directors, and managers. Many applicants are still at different stages of the approval process, with pending documents to be submitted before their applications can be completed.
By August, licensed digital credit providers had issued 9,596,509 loans worth a combined Ksh165.1 billion. The CBK’s licensing push follows growing concerns about unregulated digital lenders, including high borrowing costs, unethical debt collection practices, and misuse of customers’ personal information. The regulator urges the public to report such operators, emphasizing the need for proper licensing.
A Small Claims Court ruling in July reinforced the need for digital lenders to be properly licensed, stating that a lender operating without a CBK license would not be able to enforce lending claims. This ruling highlights the importance of CBK oversight in the digital lending sector. The CBK continues to review applications and urges applicants to submit pending documentation expeditiously.
The CBK’s efforts to regulate digital lenders aim to safeguard customers and ensure compliance with the law. The regulator has received a significant number of applications since March 2022 and is working to complete the review process. The licensing of digital credit providers is an ongoing process, with the CBK committed to ensuring that all lenders operate within the regulatory framework.
The growth of digital lending in Kenya has raised concerns about the need for effective regulation. The CBK’s licensing of digital credit providers is a step towards addressing these concerns and protecting customers. With loan disbursements reaching Ksh165.1 billion, the CBK’s oversight is crucial in ensuring that digital lenders operate responsibly and transparently.
The CBK’s licensing of 29 additional digital credit providers brings the total number of regulated lenders to 281. The regulator will continue to review applications and ensure that all lenders comply with the law. The public is urged to report unregulated digital lenders, and the CBK will work to address concerns about high borrowing costs, unethical debt collection practices, and misuse of customers’ personal information.
Key points
- The Central Bank of Kenya has licensed 29 more digital credit providers, bringing the total to 281.
- Licensed digital credit providers have issued 9,596,509 loans worth a combined Ksh165.1 billion.
- The CBK’s licensing push aims to address concerns about unregulated digital lenders, including high borrowing costs and unethical debt collection practices.
