The Central Bank of Kenya (CBK) has issued licences to 41 additional Digital Credit Providers (DCPs), raising the number of licensed providers to 126.
With this move, the regulator’s goal of ensuring transparency, consumer protection, and ethical lending practices in Kenya’s rapidly expanding digital finance sector has reached a significant milestone.
The announcement, made on Thursday, aligns with CBK’s ongoing efforts to sanitise the industry amid the growing demand for regulated digital lending services.
Before issuing licenses, CBK conducts thorough due diligence, reviewing business models, compliance with consumer protection laws, and the integrity of company directors and shareholders. The regulator also collaborates with other agencies, such as the Office of the Data Protection Commissioner, to enforce legal and data privacy standards.
Over 700 applied for licenses
Since March 2022, when CBK began accepting licence applications from digital lenders, over 700 providers have applied.
Before issuing a licence, the regulator performs extensive due diligence by evaluating business models, consumer protection laws, and the honesty of directors and shareholders.
In its statement, CBK emphasised that it would continue to work with other regulatory agencies, including the Office of the Data Protection Commissioner, to ensure that DCPS adhere to Kenya’s legal and data protection requirements.
To prevent delays in the vetting process, CBK also urged digital lenders who were still in the application pipeline to send in any outstanding documentation as soon as possible.
In a bid to curb unethical loan collection techniques, the Central Bank of Kenya continues to meticulously review applications from digital lenders. This cautious approach emphasises the value of safeguarding borrowers’ interests.
Kenya has solidified its position as a continental leader in regulated fintech innovation with the licensing of 41 new DCPs. Additionally, it tells investors and customers that the digital lending market is developing and emphasising responsible innovation, data privacy, and ethical lending.
Kenyans urged to patronise licensed digital lenders
The apex bank advises Kenyans to confirm their licence before interacting with a digital lender. A list of authorised providers is regularly posted and updated on CBK’s official website.
TechPression reported last year that CBK grants licences to 19 digital credit providers, signalling regulatory scrutiny over predatory lending practices. The licenses issued last year come one year after the licensing of 32 digital lenders, reflecting efforts to address borrower concerns.
As the country’s monetary authority, CBK is tasked with maintaining price stability, issuing currency, managing foreign reserves, acting as government banker and fiscal agent, and ensuring financial system stability and efficient payment systems.
Under the CBK (Digital Credit Providers) Regulations, 2022, licensed DCPs must register as data controllers with the Office of Data Protection and verify their funding sources to comply with anti-money laundering rules.