Digital lenders seeking CBK nod increase to 400

Friday, June 2nd, 2023 02:50 | By
Digital lenders
Image used for illustration purposes. PHOTO/Courtesy

The Central Bank of Kenya (CBK) has received an overwhelming 400 applications from digital credit providers (DCPs) seeking licenses to operate in Kenya.

This number significantly exceeds the initial projection of 200 applications, highlighting the growing interest and importance of the digital lending sector in Kenya’s financial landscape.

“We thought we had about 200 of these DCPs, surprise of surprises, the applications have short up to 400, so we are processing them according to standards of the law,” said CBK governor Patrick Njoroge. “Some of the DCPs were allowed to operate as they seek a license and have not received them yet. Hence the noise from the sector, we are working to correct that,” said Njoroge.

Njoroge confirmed that the CBK has already granted licenses to 32 DCPs and is actively reviewing the remaining applications. The surge in applications indicates the industry’s eagerness to comply with regulatory requirements and solidify their presence in the market.

The decision to license DCPs was largely driven by public outcry over predatory lending practices within the sector. Many borrowers have fallen victim to exorbitant interest rates and harsh repayment terms, leading to an unsustainable debt burden.

To address these concerns and protect consumers, the CBK took the initiative to introduce regulatory oversight. Earlier this year, Google took action against unlicensed digital lending apps by removing approximately 200 of them from the Play Store. The move was in line with the company’s commitment to safeguard user experience and ensure compliance with local regulations.

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