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By Phyllis Muchoki
Mobile phone lenders have until September this year to register with the Central Bank of Kenya (CBK) under new rules that bar the firms from sharing borrowers’ information with third parties and require them to seek the regulator’s approval for interest on their loans.
CBK had on Monday gazetted the Digital Credit Providers regulations, 2022 that will require all digital lenders to apply for licenses from the banking regulator before September.
It will now allow lenders to apply to CBK for approval of interest rates on their loans, disclose all terms of their credit to borrowers and have also been barred from sharing information of loan defaulters with third parties.
Numerous reports had blamed digital lenders for breaching the confidentiality of information of borrowers who default on loans and hiding terms of their loans, leading to predatory lending.
The regulations will see digital lenders operate for the first time under similar regulations like banks and micro-financiers.