This archive report was first published on 24 December 2021.
Kenya's Central Bank is set to regulate digital lenders, with proposed regulations aimed at protecting millions of Kenyans from being blacklisted for defaulting on small loans.
According to the proposed Digital Credit Providers Regulations, 2021, mobile digital lenders will only forward names for defaults of over Sh1,000 to credit reference bureaus (CRBs) in a bid to protect borrowers.
The regulations, which are part of changes to the law that gave the Central Bank of Kenya (CBK) powers to approve interest rates for digital lenders, will come into force in March next year.
"A digital credit provider shall not submit to any credit reference bureau any negative credit information of a customer or any other person where the amount related to the credit information does not exceed one thousand shillings," reads the proposed law.
The regulations are undergoing public scrutiny ahead of their gazettement before March 23, when CBK will start regulating the hundreds of digital lenders in Kenya.
As of this month, data from the country's three CRBs shows that borrowers who have defaulted on digital loans of less than Sh1,000 make up the bulk of 4.6 million borrowers blacklisted.
The government had previously suspended negative listing of borrowers owing less than Sh1,000 to protect borrowers reeling from layoffs and salary cuts.
President Uhuru Kenyatta had also announced a moratorium on the negative listing of borrowers with loans below Sh5 million with CRBs for a year, a directive that has been challenged in court.
