Google has removed illegal loan apps from Kenya’s Play Store, the marketplace for Android smartphones.
As of January 31, 2023, Google will require instant lending apps running in Kenya to provide proof of a license from the Central Bank; otherwise, Google will remove the apps from the Play Store. According to the Central Bank Amendment Act of 2021, this is done.
The deadline for Digital Credit Providers to submit new licence requests to the Central Bank was September 17, 2022, or they would be forced to shut down their lending operations.
According to the Central Bank’s most recent statement, only 10 of the 288 loan applications that requested permits have been approved.
In order to be accepted as a mobile digital lender in Kenya on the Google Play Store, according to Google;
- Digital Credit Providers (DCP) should complete the DCP registration process and obtain a license from the Central Bank of Kenya (CBK). A DCP must provide a copy of the license from the CBK.
- A platform that is not directly engaged in money lending activities and is only providing a platform to facilitate money lending by registered DCP(s) to users will need to accurately reflect this in the declaration while providing a copy of the DCP license of the respective partner(s).
- Google said it will only accept declarations and licenses from entities published under the Directory of Digital Credit Providers on the official website of the CBK.
Google claimed that the new update is a necessity for personal loan apps in Kenya, Nigeria, the Philippines, Indonesia, and Kenya, one of the few nations in the world to have passed legislation governing the mobile digital lending sector.
Regulation of Mobile Loan Apps by CBK
Google’s response also follows several customer concerns that compelled the Central Bank to develop a set of rules for online lending companies to abide by. The extensive list of rules includes the disclosure of all unstated costs, the prevention of unethical debt collection techniques, the source of funds for the company owners, the pricing model and parameters, the certificate of good conduct, the tax compliance certificate, and the CRB report for each shareholder, director, and senior officer.
Unregulated rapid loan companies have often targeted people from low-income groups who were seeking quick access to funds but lacked a thorough understanding of the loan procedure. Even while these rapid lending apps offered tiny loans of up to 50,000 Kenyan shillings, several of them had interest rates of over 100% a year and similar late payment fees.
These apps would also be able to access the user’s complete contact list. These platforms would contact the defaulting customers’ family and friends and harass them with abusive messages if they did not pay back the loans. They would also charge exorbitant interest and penalties and contact their family and friends.