Regulation of Digital Credit Providers

Pursuant to the Central Bank (Amendment) Act, 2021 (the “Act”) which came into effect on 23 December 2021 and which empowers the Central Bank of Kenya (“CBK”) to regulate digital credit providers, the CBK has published draft Central Bank of Kenya (Digital Credit Providers) Regulations, 2021 (the “Draft DCP Regulations”).

The Draft DCP Regulations provide that digital credit providers must be licensed under the Act and that failure to obtain a license constitutes an offence that attracts a fine of Kes 500,000 and/or a prison term of two years. Digital credit providers who are operational at the time of coming into force of the Draft DCP Regulations will be required to apply to CBK for a license within six months of the publication of the Draft DCP Regulations.

The Draft DCP Regulations further provide for consumer protection, confidentiality, credit information sharing, anti-money laundering & combating of the financing of terrorism obligations, governance & reporting requirements as well as CBK’s supervisory role. 

The Act requires CBK to publish the Draft DCP Regulations within three months of coming into force of the Act, that is, by 23 March 2022. Accordingly, in line with the Constitution of Kenya’s requirement for public participation, CBK has invited interested members of the public to provide comments on the Draft DCP Regulations which can be downloaded here.

Comments on the Draft DCP Regulations should be submitted to the CBK by 21 January 2022. Additionally, CBK has requested all digital credit providers to provide their business details by 21 January 2022. The link for the submission of business details can be accessed here. 

This alert serves the purpose of general guidance and is not intended to constitute specific legal advice.

For more information or for submission of comments, please contact Julius Wako at julius.wako@cms-di.com or Samson Mac’Oduol at samson.macoduol@cms-di.com