President Kenyatta has now given CBK the power to tame various parts of online lending.
Have you ever used an online loan app? If you answered yes then there’s a chance you’ve gone through the painstaking process of giving up a lot of your privacy to get a few thousand. For starters, the apps usually require you to give access to your contacts and give referees that they can call but without asking for your authorization.
If you default on payment, they literally call all your contacts and constantly harass them at any given time. The loans also have punitive rates and their way of recovering their loans are beyond aggressive.
What powers has CBK been given?
For starters, they have been given the power to determine the interest rates of online loans. However, it should be noted the regulator will not necessarily set the lending rate but will give lenders a pricing parameter for the loans.
The principal object of this Bill is to amend the Central Bank of Kenya Act to provide for licensing of digital credit service providers, who are not regulated under any other law. The current position is that there is no legal framework governing digital borrowing platforms. As such, the Central Bank of Kenya will have an obligation of ensuring that there is a fair and non-discriminatory marketplace for access to credit – The CBK Amendment
The law will also see the enforcement of the follows:
- license digital credit providers
- determine capital adequacy requirements for digital credit providers
- determine the minimum liquidity requirements for digital credit providers
- approve digital channels and business models through which digital credit business may be conducted
- supervise digital credit providers
- suspend or revoke a license
- direct or require such changes as The Bank may consider necessary.
The best part about this new law is that the loan apps will not be allowed to have access to personal customer data like their contact list, we’re not sure what harassed customers can do when the loan apps keep calling them but it’s been assured that by doing so, the loan apps can lose their license. We sincerely hope that Okash and other companies like them are reading this.