The Central Bank of Kenya (Amendment) Bill, 2021 (the “Bill”), published on 6th April 2021, seeks to regulate digital credit providers. Should the Bill become Law, multiple digital credit providers will be required to obtain licences to operate from the Central Bank of Kenya (the “CBK”).
The Bill amends Section 4A of the Central Bank Act Cap 491 Laws of Kenya, to include licensing and supervision of credit providers not regulated under any other written law as a core function of the CBK. It also defines relevant terms for the business of digital credit lending. A digital credit provider is a person licensed by the CBK to carry on digital credit business while a digital credit business is one of providing credit facilities or loan services through a digital channel.
A digital channel refers to the internet, mobile devices, computer devices, applications and any other digital systems as may be prescribed by the CBK.
The Bill confers on the CBK the power to license, supervise, suspend or revoke a licence and approve digital channels and business models for digital credit lending businesses. The CBK shall also have power to set minimum liquidity requirements and capital adequacy requirements for digital credit providers.
Any digital credit provider who operates without a license will be committing an offence susceptible to a fine not exceeding Kshs. 5,000,000.00 (approximately US$ 50,000) or to imprisonment upon conviction for a term not exceeding three (3) years or to both penalties.
The Bill anticipates the CBK will make regulations necessary or expedient to seamlessly register, supervise and manage digital credit providers. Furthermore, there need be guarantees of data protection, consumer protection, credit information sharing and anti-money laundering and countering financing terrorism.
Should the Bill be passed into law, all current and active digital credit providers shall register with the CBK within six (6) months of the Act coming into force. Further, any regulations shall be made within three (3) months of the Act coming into force.
The Bill can be accessed here. Please contact us at info@cfllegal.com should you require further information.
