Two weeks after 337 unregulated digital mobile lenders and micro financiers were barred from forwarding the names of loan defaulters to credit reference bureaus (CRBs) by Central Bank of Kenya (CBK), Digital lenders have fired back saying policymakers are making a huge mistake frustrating them.
The lenders say policymakers should emulate and adopt regulation standards such as those in the United States and the United Kingdom as financial technology continues to witness an unprecedented rise amid the Coronavirus pandemic.
The Digital Lenders Association of Kenya (DLAK) says they have already identified the need to implement some regulations over and above the current Code of Good Conduct and that a set of rules that have been signed and implemented by all the members of DLAK.
According to Zenka Finance Chief Executive Duncun Motanya Kenya stands a chance to reap from the growth of fintech despite challenges such as consumer protection, innovation, competition and frustration that are facing the industry.
“While there is an expectation for the industry to become even more professional and evolve past its start-up phase to a more mature growth phase, we need to learn several lessons from different developed countries, pick and adopt international best practices that will support the growth of digital lending and bolster financial inclusion over the next phases of growth,’’ said Motanya.
“In the United Kingdom, which is considered to have Europe’s most developed financial market and one of the biggest hubs for financial innovation globally the Financial Conduct Authority (FCA) regulates among other non-bank lenders and digital financial providers,’’ Motanya added.
The digital lenders also back a competitive lending market to help lower the costs of scoring and disbursing loans to lenders, and help borrowers access more affordable credit.
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