On 7th December,2021 President Uhuru Kenyatta assented to the Central Bank of Kenya (Amendment) Bill, 2021.
The amended Central Bank Act, 2021, gives the Central Bank of Kenya powers to license digital lenders in the country as well as ensure the existence of fair and non-discriminatory practices in the credit market.
The Act mandates CBK to publish the regulations to fast-track the carrying into effect of the new amendments, within three (3) months’ time.
Since the registration procedures will be contained in the yet to be published regulations, the implication is that registration will commence in earnest, once the regulations have been published. Hence, existing digital credit providers have about three (3) months to ensure that they register their businesses, or risk falling afoul of the Act with attendant penalty.
The Digital Lenders are required to comply with the existing legal framework on the management and processing of personal data that is compliant with Data Protection Act, 2019.
In the same vein, digital lenders will be required to comply with the credit information sharing. The Amendment is however not clear yet if the digital lenders will be required to submit customer credit information reports to Credit Reference Bureaus and if the CRBs will, in turn, supply them with individual credit information reports.
The Act prohibits any person from engaging in the digital credit business without a license and in this regard provides a penalty of imprisonment for a term not exceeding three (3) years or a fine not exceeding Kenya Shillings five million (KES 5,000,000) or to both.
We will keep you apprised should CBK publish the regulations to operationalize these amendments.
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