THE CENTRAL BANK OF KENYA (AMENDMENT) BILL, 2020
The Central Bank of Kenya (Amendment) Bill, 2020 sponsored by Hon. Gideon Keter, was recently published and seeks to regulate digital money lenders. It defines a digital money lender as “an entity that offers credit facilities in the form of mobile money lending applications”.
The Bill seeks to amend the Central Bank of Kenya Act to require digital money lenders to obtain annual licences from the Central Bank of Kenya (the CBK). It also contains governance provisions and provides for prescription of minimum capital requirements for digital money lenders.
If enacted in its current form, it will require digital money lenders to supply their prominent terms and conditions to the CBK and to announce their interest rates when advertising their services.
Although the Bill appears well intended, it does not provide for a transition period for the digital money lenders who are already in operation to obtain licences. This could disrupt services as such players may be forced to shut down pending licensing.
The Bill does not also exempt banks and other financial institutions that are already regulated by the CBK. It is unclear whether such entities will be required to obtain additional licences as digital lenders.
There is need for Hon. Keter, the sponsor of the Bill, to work with the Hon. Oroo Oyioka who sponsored a similar Bill last year (Hon. Oyioka’s Bill) to ensure that the two Bills are merged and harmonised. Hon. Oyioka’s Bill was broader and sought to give the CBK powers to regulate providers of digital financial products and services; digital credit service providers; providers of financial products and the conduct of financial services. Please see our write-up on Hon. Oyioka’s Bill on this link.