CBK Looking To Stiffen Jail Terms And Fines For Illegal Digital Money Lenders

According to recent reports the Central Bank of Kenya’s (Amendment) Bill 2021 is looking to regulate the digital money lending operators while also issuing tough penalties to all rogue operators in the sectors.

The Amendment Bill 2021 has so far been introduced in the parliament by Gladys Wanga the Chairperson Departmental Committee on Finance and National Planning in parliament. It was also published in a Special Issue of the Kenya Gazette on the 6th of April 2021.

The proposal if approved by the parliament states in part that all unlicensed digital money lenders will face imprisonments for a period of not more than 3 years or a fine of not more than 5 million Kenyan Shillings or both.

The Central Bank of Kenya will henceforth license all digital lenders and publish all regulations that pertain to the management requirements for digital credit or loans prove providers.

The Central Bank of Kenya will in addition, be listing all prohibited and permissible activities, anti-money laundering, as well as the various measures which are used in the countering of the financing of terrorism. It will also allow digital lenders to be able to share their credit information while also protecting consumer privacy and offering data protection.

There have been numerous cases where digital lenders were accused of accessing the personal phone data of individuals including their portraits, ID Card numbers, personal income information or salaries, demanding an undisclosed processing fee, as well as a number of business behaviors which were uncalled for.

The Central Bank of Kenya (CBK) will also be spelling out reporting requirements for digital credit providers, penalties and offenses, alongside numerous measures that will aid in the regulation of digital lending in Kenya.

All regulations which will be required to be made under the Act in order to provide effect to the provisions on digital lending shall be created within 3 months of the coming into force of the Act.

Before the implementation of this law all individuals who are involved in the business of providing credit facilities or loan services through a digital avenue and are not regulated under any other law, must register with the Central Bank of Kenya within 6 months of the implementation of the Act.

The principal objective is to amend the Central Bank of Kenya Act in order to cater for the proper licensing of digital credit service providers who are not currently regulated under any other law.

As things currently stand there is no legal framework that is governing digital lending platforms or outlets.

The Central Bank of Kenya (CBK) therefore has an obligation to make sure that the access to credit marketplace does not discriminate and is fair.

How informative was this article? Are there any other news topics, categories, or How To topics, that you would like us to write on? Feel free to reach out to Mpesa Pay in the comment section.