Digital lenders hit 58 with CBK’s latest approvals
The Central Bank has licensed seven mobile loan providers, bringing to 58 the total number of firms that have received the green light to offer mobile phone-based credit in Kenya. The newly licensed digital credit providers announced by the CBK are ED Partners Africa, Ismuk, Mint, Mogo Auto, Payablu, Progressive, and Stride Credit.
In March, the banking industry regulator gave the green light to 19 digital credit providers to continue rolling out their business in the country.
Following public outcry on adverse loan recovery measures and well as high interest rates, CBK received applications from 550 applicants in March 2022, when the regulator set out to bring sanity to the sector to eliminate rogue elements.
“CBK has engaged other regulators and agencies pertinent to the licensing process, including the Office of the Data Protection Commissioner,” the watchdog noted in a statement.
As part of evaluating the applicants, CBK has been checking digital providers’ business models, consumer protection, and fitness systems. Also under scrutiny has been a check on the digital providers’ proposed shareholders, directors, and the existing management structure. “This is to ensure adherence to the relevant laws and importantly that the interests of customers are safeguarded.
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Out of the 550 applicants who sought approval in March 2022, only 58 have received the green light to continue with business. “Other applicants are at different stages in the process, largely awaiting the submission of requisite documentation.”
Oversight of DCPs was precipitated by concerns raised by the public about the predatory practices of unregulated mobile lenders, and in particular, their high cost, unethical debt collection practices, and the abuse of personal information.
Section 59(2) of the Central Bank of Kenya Act (CBK Act), requires that all operating unregulated Digital Credit Providers must apply to CBK for a license within six months of the publication of the Central Bank of Kenya (Digital Credit Providers) Regulations, 2022 by September 17, 2022, or cease operations.
On March 21, 2022, CBK announced the publication of the Regulations on March 18. They provide for the licensing and oversight of DCPs. The Regulations were issued pursuant to Sections 57(1), 57(3) and 57(4) of the CBK Act. Further, on May 17, 2022, CBK reminded all currently operating DCPs to apply to CBK for a license.
