Kenyans having loans from Tala, ocash, Opesa and many more digital applications are in trouble after the National assembly passes this law

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If the Central Bank (Amendment) Bill, 2021 is passed, digital lenders will have to comply with data protection laws or awaken risk licenses.

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On Friday, the National Assembly Committee on Finance and National Planning asked the Central Bank of Kenya to cooperate with the Communications Authority of Kenya (CA) and the Office of the Data Protection Commissioner to audit digital lenders’ compliance with data privacy.

 

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This is likely to limit the high cases of debts that are bringing shame  in a country having many  digital lenders.

 

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Some digital leaders have been accessing borrowers’ mobile phone contacts, texting or calling friends and relatives in recent days, demanding repayments of outstanding loans.

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“This is a gross violation of data protection laws and should be dealt with accordingly,”  Gladys wanga  said during a committee in a report that was released on Friday last week.

 

 

 

On addition to what appeared to be a victory for digital lenders, a parliamentary committee also allowed them to access and list borrowers with the Credit Reference Bureau (CRB) under the proposed ‘digital lenders’ law.

 

 

This is not only by the coming together of digital lenders led by the Digital Lenders Association of Kenya (DLAK), but also by the invlusivity of  Central Bank of Kenya (CBK).

 

 

“The committee agreed to the proposal to allow digital lenders to disclose any positive or negative information of their customers to licensed credit reference bureaus,” said the Gladys wanga during the National assembly committee.

 

 

 

 

DLAK had more emphasis on the return of digital lenders to the CIS system in meetings with the Finance Committee, highlighting the role of CRBs in credit issuance.

 

 

 

 

DLAK told the committee, “Many Kenyans have lost credit history reports that enables them to obtain credits at lower  rates.”

 

 

In April last year with CBK citing misuse of the credit sharing platform by consumers, digital lenders were prevented from listing Kenyans with CRB.

 

 

DLAK is pushing for restart of  the listing freeze in view of the credit report in issuance of credits.

 

 

During the lockdown period, DLAK said that the loans which were  disbursed monthly in the background of the freeze were valued  to a total of Sh2 billion.

 

 

The lifting of restrictions is likely to see the number of Kenyans listed with the CRB spike on the back of advanced loan defaults covering the loans which they acquired during the Covid19 pandemic period.

 

 

 

 

In reference to data from the CRB,  the number of ‘blacklisted’ Kenyans  was at 3 million bybthe end of December  last year.

 

 

This was  due to the  omissions directives which  the Government  induced to the digital lenders.

 

 

 

 

The National Assembly Finance and National Planning Committee has allowed CBK to license digital lenders.

 

 

It has also empowered the CBK bank to set acceped and fair ways on pricing of digital loans.

 

 

 

On July, the central Bank of Kenya said licensing digital lenders would give it a monitoring role that would lead  to a stronger credit market and consumer protection.

 

 

DLAK wanted the proposed law to restrict them to registration instead of licence since licensing would be much costly to  them.

 

 

“We would like to suggest that regulation should focus on the registration process rather than licensing. This is a common practice for digital lenders regulations that is much applicable in most of europe countries like Spain, UK and many  more,” DLAK said.

 

 

 

While digital lenders will not be subjected to capital adequacy and minimum liquidity requirements, the committee highlighted that they wouldn’t pose any risk to public funds.

 

 

 

Digital lenders will have six months to adhere with the newly set  rules as  CBK  was  given a time frame of 60 days to respond to license applications of the digital lenders.

 

 

The proposed legislation is expected to be passed by the National Assembly in the sooner.

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