Parliament set to approve bill that will see CBK Tame Rogue loan applications
Soon, CBK will be able to handle online lending applications which for a long time remained mostly unregulated due to a failure of the law.
Named the Central Bank Amendment Bill, 2021, and first seen a few weeks ago, the proposal has been approved by the Parliamentary Finance and National Planning Committee.
This effectively means that the central bank is finally on the verge of taming the space. The report only needs to be rechecked by Parliament before it can be promulgated.
Additionally, a Business Daily report found that the Committee granted the CBK the power to determine loan interest rates online. However, it should be noted that the bank will not necessarily set the lending rate, but will give lenders a pricing parameter for the loans.
TThe main purpose of this bill is to amend the Central Bank of Kenya Act to allow digital credit service providers, which are not governed by any other laws. 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 to ensure that there is a fair and non-discriminatory market for access to credit – The CBK Amendment
A few days ago, it became apparent that digital lenders were operating their business using unethical tactics.
Online loan applications have a short repayment period, usually less than fifteen days, and charge insane interest rates.
Customers complain that the teams handling the funds are brutal, especially when they don’t pay the money on time.
For example, apps use shame tactics such as calling a borrower’s contact list. Other agents are downright rude and are in fact abusive towards their clients.
Once approved, the law will ensure that the following are respected:
- fire digital credit providers
- determine capital requirements for digital credit providers
- determine minimum liquidity requirements for digital credit providers
- approve digital channels and business models through which digital lending activities can be conducted
- oversee digital credit providers
- suspend or revoke a license
- order or require such changes as the Bank may deem necessary.