The Central Bank Governor Dr. Patrick Njoroge, was optimistic about the 2021 Central Bank Amendment Act aimed at taming digital lenders.
Contrary to expectations, however, Kenyans shouldn’t expect a significant cut in Digital Leaders’ interest rates when the 2021 CBK Amendment Bill goes into effect.
Claiming the ordinance did not intend to cap rates when implemented, the governor only intended to streamline the sector, adding that the ordinance was long overdue.
Mobile banking services in Kenya
In answering questions during the last Monetary Policy Committee (MPC) briefing for the year, the Governor remarked, âIf you mean we have some kind of caps and things like that, the answer is of course NO, we won’t go into that again part of the world. ”
To insist that CBK ensure fair credit pricing by digital lenders. “What we are going to do and have been doing on the banking side with banks is to ensure that pricing is reasonable.”
The regulator has also indicated that the same measures that banks were forced to take could also be applied to digital lenders once the bill goes into effect.
âYou have already seen what we have done at the banks and we have talked about our pricing principles. We were talking about things related to dealing with customers so this is really a good model to start with, âhe insisted
Digital lenders have been on a collision course with the regulator on interest rates, but some of the market participants have been described by experts as exorbitant and exploitative.
According to Kelvin Mutiso, chairman of the Digital Lenders Association of Kenya (DLAK), digital lenders are looking forward to being regulated to weed out players who have taken advantage of customers
This is because the credit appetite has increased in the country and the number of defaulters is also increasing due to easier access to credit via digital platforms.
A recent report by DLAK shows that more than 60 percent of Kenyans still view digital platforms as their first choice for credit, while conventional players like banks come as the last option.
What remains to be seen are the changes that regulation will bring to the credit market, which has been overrun by unregulated and springing up lenders.
Digital lending platforms have been blamed for negatively listing increasing numbers of debtors with the country’s credit bureaus, which led to an instruction from the president to cut the list in half.
On October 20, during the Mashujaa Day celebrations, President Kenyatta announced the suspension of the CRB listing for Kenyans with loans of less than 5 million shunt who defaulted as of October 2020.
âThe competent authorities are responsible for loans of less than 5 million Sh. put in place a moratorium on listing in CRBs for a period of 12 months until the end of September 2022, âPresident Kenyatta said at the time.
A file image of the Central Bank of Kenya (CBK) building in Nairobi.