Kenyan law makers have finally accorded the country’s financial regulator – CBK powers needed to control how much interest financial institutions charges you on mobile loans. Under the proposed law which is currently before parliament after getting a node from the parliamentary committee on Finance and National planning, the CBK will have a final say on how much interest financial institutions can charge on mobile loans.
Currently, digital lenders in the country place interests on their loans themselves without any form of regulations, a move that brought about very expensive loans. Hard economic times coupled with the adverse effects on the corona virus has drove many Kenyans to take up loans, which most of them are very expensive and have since put most of them in debt loops.
According to members of the Financial committee, the new regulations are aimed at reducing cost of digital loans to Kenyans by giving the regulator absolute powers to supervise lenders. This will be the first time in the country that such regulations have been put in place, especially after the CBK restricted unregulated mobile lenders from accessing the CRB bureaus. This is a new development from the initial proposals that were mum on lending rates regulations. Earlier proposals only outlined how digital lenders were to approach on their loan pricing. This essentially meant that they only needed to seek necessary approvals from the regulator, just like banks do.