CBK says consumers should only worry about unlicensed digital lenders

Kenyans have nothing to worry about digital lenders regulated by the Central Bank of Kenya (CBK) among them Mshwari, Timiza, KCB Mpesa, and Stawi.

The CBK boss Dr. Patrick Njoroge says customers should, however, be careful when dealing with unlicensed and unregulated digital lenders who continue to pop up everywhere.

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In a presentation sent to the ICT committee of the Senate seen by Maudhui House, Dr Njoroge said the CBK has mechanisms put in place to protect consumers of products that are under its purview.

The presentation sought to answer the role of the CBK in regulation and oversight of mobile money services under the National Payment Systems (NPS) Act.

Njoroge said before approving any mobile-based banking product, the CBK considers the reasonableness of the proposed charges, the market rate for similar products, government’s policy in fostering a market-oriented economy, inflation rate and the risks relating to the proposed products.

This way, a number of consumer issues are addressed before the product is allowed to the market.

Since these are regulated, any that violates the laid down procedures and operate outside the law can easily be punished through a withdrawal of licenses.

Dr. Njoroge says there are a number of complaints regarding digital players not regulated.

“Concerns have arisen on issues such as data privacy, source of funds and consumer protection,” He said adding that some of the consumer protection concerns include high-interest rates or transaction fees, multiple borrowing from different lenders, non-disclosure of pricing or terms and lack of complaints or dispute resolution mechanism.

Mobile loans have become a hit in the country due to their accessibility and ease of application. Hundreds of thousands of Kenyans are using them every month to support their businesses and meet emergencies.

Women in Gikomba and small and medium enterprises around the country turn to mobile loans to help fund their daily inventory and pay later.

The CBK has warned that is will soon crackdown on unlicensed lenders who are spoiling the name for others. On its part, the information ministry says the provision of mobile financial services are made possible through technological advancement.

“This has led to some form of convergence between the telecommunication and financial sectors necessitating the co-regulatory approach being implemented through collaboration between the Communications Authority of Kenya (CA), which is the ICT regulatory Authority, and the Central Bank of Kenya, the financial regulatory authority,” the ministry said in its written memorandum.

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