The Central Bank of Kenya (CBK) will regulate monthly interests charged by digital mobile lenders in new proposed changes if adopted by the Parliament.
According to Business Daily, the banking regulator will, among others, have to approve increases in digital lenders rates and other loan charges as well put a ceiling on non-performing loans at not more than twice the defaulted credit.
The agenda behind the Central Bank of Kenya (Amendment) Bill, 2020 is to curb the high digital lending rates that have plunged borrowers into accumulating huge debts.
“The principal objective of this Bill is to amend the Central Bank of Kenya Act to regulate the conduct of providers of digital financial products and services. CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit,” reads a notice in part.
Read: Metropol CRB On The Spot For Blacklisting Borrowers Against CBK Directive
In April, several mobile apps in Kenya suspended operations and no longer offered lending services, following a recent directive by the Central Bank of Kenya (CBK) to deny them access to Credit Reference Bureau (CRB) services.
This was after the CBK withdrew the approvals granted to unregulated digital (mobile-based) and credit-only lenders as third party credit information providers to CRBs. The withdrawal was in response to numerous public complaints about misuse of the Credit Information Sharing System (CIS) by the unregulated digital and credit-only lenders, and particularly their poor responsiveness to customer complaints.
Read Also: Mobile Lending Apps Silently Halt Operations As CBK Directive on CRBs Takes Effect
A section of mobile lending apps, however, disregarded the directive by CBK and continued blacklisting borrowers during the COVID-19 pandemic. Metropol credit reference bureau (CRB) was thus put on the spot for disregarding the directive.
According to a Metropol employee who reached out to Kahawa Tungu on condition of anonymity, the bureau has been listing borrowers who default loans for 30 days, instead of the stipulated 90 days.
Data in our possession indicated that one of the borrowers who was listed had defaulted for only 30 days as of April 1, hence was not supposed to be blacklisted. We could not share the details of the borrower for lack of his consent, and to protect his privacy.
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