The principal object of this Bill is to amend the Central Bank of Kenya Act Cap 490 Laws of Kenya to provide for licensing of digital credit service providers, who are not regulated under any other law.
The current position is that there is no legal framework governing digital borrowing platforms. As such, the Central Bank of Kenya will have an obligation of ensuring that there is a fair and non-discriminatory marketplace for access to credit.
In effect, the Bill gives the CBK regulatory powers to inter alia license digital credit providers; determine capital adequacy requirements for digital credit providers; determine the minimum liquidity requirements for digital credit providers; approve digital channels and business models through which digital credit business may be conducted; supervise digital credit providers; suspend or revoke a license; and direct or require such changes as The Bank may consider necessary. It further prohibits any person from carrying on digital credit business unless he’s been duly licensed by the CBK.
This Bill is timely and should be operationalised as soon as possible because of the following reasons:
First, as at now, nothing stops the digital credit service providers from charging exorbitant interest rates from the loans they offer.
Secondly, the providers access a lot of data and information about their customer. This raises more questions regarding data protection and the extent with which they can use information relayed to them.
Most importantly, it introduces offences and penal sanctions to control the conduct of these providers. Currently, there is no legal basis upon which this can be enforced.
Finally, the Bill will come in handy in terms of anti-money laundering laws and measures for countering financing terrorism. Parliament should expedite the enactment of this Bill to end the current lacuna that is being exploited at the expense of consumers of this services.
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