Kenyan parliament has finally given a nod to a bill seeking to put several digital lenders under the watch of the central bank of Kenya. The new law is seeking to tame what MPs call predatory lending by having the CBK regulate loan rates as well as on how defaulters are treated. During last Thursday’s session, members of parliament allowed the bill for review and possibly passed into law, effectively opening the path for the central bank to have a say on how digital mobile lenders calculate their interests.
As of this writing, the Central Bank of Kenya Amendment bill of 2020 has now been forwarded to the National Assembly Committee on Finance and National Planning proving room for Kenyans as well as concerned stakeholders to air their views before its handed over to the house for debate and possible vote.
While the central bank of Kenya regulates financial institutions such as banks and micro-lenders, digital lenders have thus far escaped its influence and have run wild, some offering some ludicrous interest rates to Kenyan. On the other hand, they’ve appealed to more Kenyans looking for short term loans without security, only for them to end up hooked on their platforms for ever due to exorbitant interest rates.
By passing the new bill, hundreds of digital lenders will now be under the watchful eye of the financial regulator, especially in determining interest as well as how defaulters are treated.
According to the nominated member of parliament, Gideon Keter, if the bill is passed, then these objectives will have been met; prohibit any person, institution or firm from lending money to Kenyans unless licensed by the Central Bank of Kenya.