Regulating the digital mobile space by the Central Bank of Kenya has come a long way, introducing controls on charges and fees on a digital lending craze which was unregulated in the past leaving thousands of Kenyan youth exploited with massive interest rates and listed at the CRB for as low as Sh50.
The new proposed Central Bank of Kenya (Amendment) Bill, 2020 that is supposed to regulate digital financial products and services, including digital credit providers has attracted mixed reactions from the public as digital lenders heavily oppose the Bill.
The proposal’s objective is to ‘amend the Central Bank of Kenya Act in order to ensure that the Central Bank of Kenya regulates the conduct of providers of digital financial products and services and financial products and services.’
Speaking on the proposed law, Ivan Mbowa, the regional general manager for Tala and director at Digital Lenders Association said it was unfair to charge every customer the same rate because different customers present different risk. “Because of different intended use of the funds. Somebody borrowing for consumption should have a different rate from one borrowing to put in business.”
While the Bill looks to cap charges, the Digital Lenders Association says it would be ill-thought and the digital lending space should continue using risk-based lending that examines the ability of a borrower to furnish loans based on their data.
While some of these regulations will weigh heavily on digital lenders especially in the innovation sector, we should also bear in mind that while they have filled a space left by traditional banks.
The public is welcome to bring ahead their input and comments on the proposal. Public opinion should be emailed to the Parliament Clerk before August 11th.
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