The Central Bank of Kenya (CBK) gazetted Regulation 60 of the Non-Deposit Taking Credit Providers Regulations, 2026 on September 29, 2026 (Legal Notice No. 191 of 2026), introducing new obligations for lenders that use artificial intelligence in credit decisions.
The rules require providers to make automated outcomes explainable to customers, to inform borrowers when AI is involved in an interaction, and to maintain human oversight, with standards covering discriminatory bias, model accuracy, robustness, transparency and accountability.
The framework also raises licensing costs, increasing application fees from KSh5,000 to KSh100,000 and annual fees from KSh20,000 to KSh500,000, while registered providers must pay KSh250,000 each year and face a KSh1 million penalty for late payment.
These regulations extend CBK oversight beyond digital credit firms to a broader category of non-deposit-taking credit providers, following amendments to the Central Bank of Kenya Act in 2024.
CBK notes that most digital loans remain below KSh20,000 with repayment periods of one week to two months, describing them as emergency funding and working-capital sources, and reports that outstanding gross loans rose from KSh110.1 billion in December 2025 to KSh153.8 billion in June 2026, with loan accounts increasing from 6.74 million to 8.9 million and average balances per account moving from KSh16,335 to KSh17,281.
By September 2026, CBK had licensed 281 digital credit providers and has proposed that lenders stop automatically raising credit limits, instead requiring a fresh assessment of a borrower’s current financial circumstances before any limit review.
The regulator highlighted that the cost of recovering some loans can exceed the amount advanced, especially for small balances, and that it began licensing digital credit providers in 2022 after concerns about high interest rates and aggressive debt-collection practices, including public shaming of borrowers.
Research by the Competition Authority of Kenya and Innovations for Poverty Action found that 33 per cent of surveyed digital credit users held multiple active loans before the COVID-19 pandemic; among those, 52 per cent cited emergencies and 35 per cent low loan limits as reasons, and borrowers with loans from several providers were more likely to default than those borrowing repeatedly from a single provider.
FinAccess data from the 2024 Household Survey showed that 16.6 per cent of borrowers defaulted without any repayment, up from 10.7 per cent in 2021, while the share who paid late or missed a payment fell to 37.2 per cent from 45.8 per cent, and those reporting no default rose to 45.9 per cent from 42.6 per cent.
Absa Bank Kenya’s Absa Next product offers instant personal and business loans ranging from KSh500,000 to KSh1 million using alternative credit scoring, illustrating how lenders are applying data-driven models.
CBK said the new regulations aim to address how lenders use data and automated systems, alongside conduct and affordability, with AI-driven decision requirements and the proposed fresh-assessment approach forming the core of future oversight.
