Central Bank of Kenya Licenses 19 New Digital Credit Providers

Central Bank of Kenya Licenses 19 New Digital Credit Providers

On March 6, 2024, the Central Bank of Kenya (CBK) announced the licensing of an additional 19 Digital Credit Providers (DCPs), a significant development in the ongoing evolution of Kenya's digital lending landscape. This latest move follows the licensing of 32 DCPs earlier in March 2023, bringing the total number of licensed digital credit providers to 51.

Strengthening Regulatory Oversight

The licensing of these DCPs is carried out under Section 59(2) of the Central Bank of Kenya Act (CBK Act), which empowers the CBK to regulate financial institutions to ensure consumer protection and financial stability. Since March 2022, the CBK has received an impressive 480 applications for licensing, demonstrating the growing interest in digital credit services across the country.

The licensing process has involved close collaboration between the CBK and the applicants. This partnership has focused on reviewing business models, ensuring adherence to consumer protection regulations, and assessing the fitness and propriety of proposed shareholders, directors, and management teams. By prioritizing these aspects, the CBK aims to safeguard the interests of customers and ensure that only reputable players enter the market.

Acknowledging Collaborative Efforts

In a statement, the CBK acknowledged the efforts of both the applicants and other regulatory bodies, including the Office of the Data Protection Commissioner. Their joint efforts have been crucial in streamlining the licensing process and ensuring that the DCPs comply with relevant laws.

For those interested, details about the 51 licensed DCPs can be accessed through the Central Bank’s official channels. Other applicants are currently at various stages of the licensing process, with many awaiting the submission of necessary documentation. The CBK has urged these applicants to expedite their submissions to facilitate a smooth completion of the review process.

Addressing Public Concerns

The push for licensing DCPs has been motivated by public concerns regarding the practices of unregulated digital lenders. Many consumers have reported issues such as predatory lending, exorbitant costs, unethical debt collection practices, and misuse of personal information. By enforcing a robust licensing regime, the CBK aims to combat these issues and foster a more transparent and responsible digital credit environment.

Reporting Unregulated Providers

The CBK has encouraged the public to report any unregulated DCPs through the email address dcps@centralbank.go.ke. This initiative is part of the CBK's commitment to promoting consumer protection and ensuring that all digital lending practices adhere to established standards.

Conclusion

The recent licensing of additional Digital Credit Providers marks a significant step forward in enhancing consumer protection and regulatory oversight in Kenya's digital lending sector. As the landscape continues to evolve, the CBK remains dedicated to fostering a safe and reliable environment for all consumers, ensuring that they can access digital credit solutions with confidence.

Stay tuned for further updates as the Central Bank continues its efforts to regulate and improve the digital credit landscape in Kenya.
View the press release HERE.