Speed up bill, CBK tells Senate
The Central Bank of Kenya (CBK) hopes to rein in on predatory lending by digital lenders, micro-finance organisations and banks through a new bill.
CBK Governor Patrick Njoroge yesterday told senators that he hopes the Upper House would pass the Central Bank Amendment Bill 2020 before Christmas to empower the regulator increase its oversight mandate over the wider financial market.
If enacted, the Bill allows CBK to supervise the conduct of players, even those currently regulated under existing frameworks, such as the Capital Markets Act and the Insurance Act.
“CBK proposes a principle based approach, not requirements, as in the case for banks.
This will include Anti Money laundering (AML), data protection, transparency in pricing and complaints resolution,” Njoroge told Senators yesterday.
The new Bill seeks to bring Fintechs under regulation through consensus built by Insurance Regulatory Authority (IRA), Capital Market Authority (CMA) and CBK.
Predatory lending
The senators had sought to find out what the regulator was doing to stop a wave of predatory lending where banks and Fintechs were extorting as much as 40 per cent from borrowers.
“I don’t see why some of these illegal lenders cannot be shut down until the lenders straighten up.
Block the sites of these people taking advantage of the people,” said Senator Mutula Kilonzo.
The governor acknowledged that digital lenders lack transparency in pricing, “it has led to serious social desperation where debt collectors call your relatives, your employers and even your parents to get their money back,” he said.
Digital lenders have since been operating with caution as most of them avoid advertising of their apps.
Kilonzo proposed that CBK forms a cyberspace police force to arrest criminals before they steal money from Kenyans.
On stability of the sector, Senator Rose Nyamunga sought to kmow the depth of stability in the banking sector after losing money when Chase Bank went into receivership.
“I lost my money with Chase Bank, every time I go to ask they show me very little money, so I decided to let everything go,” she said.
The regulator was challenged to broaden its approach and to tartget even the large companies fleecing Kenyans with high interest rates.
Digital lenders
“We are talking about the KCBs and the Safaricoms of this world, they are charging us interest of up to 40 per cent,your team has not done justice to this by just addressing small digital lenders.
What KCB is charging is nowhere near the 9 to 13 per cent that you have cited,” said Kericho Senator Aaron Cheruiyot.
“I am taking on new energy from these conversations to accelerate what should be accelerated,” said Njoroge.
The regulator said that they have managed to increase sector stability through consolidations via acquisitions and mergers.
“We released Sh35 billion in fresh liquidity in terms of lower CRR, to 53 per cent which is above the statutory limit of 20 per cent,” said Njoroge.
The committee chair however told CBK to act now since the Bill is not likely to pass into law before next year.
