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Kenyans For Themselves As CBK Leaves Lending Apps ‘Unregulated’

CENTRAL BANK, NYS SCANDAL
Central Bank Governor, Patrick Njoroge. / COURTESY

Central Bank of Kenya (CBK) will not regulate all mobile lending apps, but will instead regulate only those affiliated to local commercial banks.

This means that Kenyans will have to face unfair financial practices from the unregulated lenders, who could operate as they wish.

According to CBK governor Dr Patrick Njoroge, the only help the government will provide is tagging approved lenders with a mark of approval from the regulator (CBK).

Njoroge revealed this during the Afro-Asia Fintech Festival.

Read: Over Half A Million Kenyans Listed On CRBs For Loans Less Than Ksh200

“These products will soon be indicating that they have been approved by the CBK. This is to distinguish them from other institutions providing lending on the same platform- mobile phone apps,” he said.

Among the apps that will have the approval mark include M-shwari, Fuliza, KCB-Mpesa, Stawi for SMEs and any other online financial products offered by local commercial banks.

In the recent past, Kenyans have been grappling with malpractices from the apps, including misuse of personal data and extremely high interest rates. Those who default loans are listed on CRBs, without a warning.

Read: How Kenya ICT Board Kills the Spirit of Tech Innovators and Content Generators

Recently, it was revealed that over 500,000 Kenyans listed by various credit reference bureaus (CRBs) owe less than 200 shillings.

All the ‘victims’ took their loans from mobile loan apps, which have become popular across Kenya’s middle and low class income earners population. Most of them are youths between the age of 18 to 24 years.

Currently, there are over 500 mobile loan lenders who issue micro-loans to Kenyans, defined by short repayment period and high interests.

The shortest repayment period is one week while most apps give their borrowers one month to repay loans.

Read: CBK, Five Banks Partner To Create Loan App For SMEs

Central Bank of Kenya (CBK) governor Dr Patrick Njoroge directed commercial banks and microfinance institutions not to list a borrower on the CRB until one has failed to pay within 6 months after the maturity of the loan. The directive is to become effective in 3 months.

In a presentation in parliament yesterday, Njoroge singled out Tala, Branch and Okash as institutions that could be used in money laundering.

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Written by Francis Muli

Follow me on Twitter @francismuli_. Email francis@kahawatungu.com

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