The Central Bank of Kenya has issued an ultimatum to digital lenders in that country to renew their operating licenses by September of risk being proscribed under its new regulations.
According to CBK Governor Patrick Njoroge, new regulations guiding the activities of digital lending services are expected to be gazetted this month, cracking down on previously unregulated operators in Kenya.
“Regulations governing Digital Credit Providers will be gazetted later this month to pave way for the licensing and oversight of DCPs by CBK,” said Dr Njoroge.
“All previously unregulated DCPs will be required to apply to CBK for a license by September 2022 or cease operations.”
Kenya’s President Uhuru Kenyatta had in December 2021 approved a change in the law that allowed the central bank to regulate digital lenders who tended to violate consumer privacy. The Digital Credit Providers Regulations,2021 gave CBK powers to revoke licences of firms that send information of loan defaulters to third parties in name-and-shame tactics meant to recover the debts.
Only a few days ago, Nigeria’s consumer protection council shut down several digital lenders in the West African country for illegal practices and unlicensed banking.
According to the FCCPC, the raid is in response to customers’ complaints of malpractices by the financial institutions. Speaking during the raid, the Chief Executive Officer of Nigeria’s FCCPC, Babatunde Irukera, explained that customers had accused the financial institutions of violating their privacy in their debt recovery drive.