Central Bank to Determine Interest Charged by Digital Money lenders

After being striped off the CRB database access following the public outcry over debt recovery methods used by most digital lenders, the Central bank off Kenya has moved in to spell tough rules for the digital lenders among them putting a cap on the interest charged by the Digital lenders.

Digital lenders who solely issue their loans through various mobile apps have for the past months come under public scrutiny following complaints from the public. The industry which had for long been unregulated saw a large number of Kenyans listed by CRB after many fell victims of their antics.

Kenyan law makers have finally accorded the country’s financial regulator – CBK powers needed to control how much interest financial institutions charges you on mobile loans. Under the proposed law which is currently before parliament after getting a node from the parliamentary committee on Finance and National planning, the CBK will have a final say on how much interest financial institutions can charge on mobile loans.

According to members of the Financial committee, the new regulations are aimed at reducing cost of digital loans to Kenyans by giving the regulator absolute powers to supervise lenders and set rules the lenders must play within.

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This will be the first time in the country that such regulations will be put in place, especially after the CBK restricted unregulated mobile lenders from accessing the CRB database and list defaulters. This is a new development from the initial proposals on lending rates regulations. Earlier proposals only outlined how digital lenders were to approach on their loan pricing. This essentially meant that they only needed to seek necessary approvals from the regulator, just like banks do.