{"id":114794,"date":"2024-03-14T17:59:27","date_gmt":"2024-03-14T17:59:27","guid":{"rendered":"https:\/\/www.africa-press.net\/kenya\/all-news\/regulatory-gap-exposing-kenyans-to-exploitative-loan-terms"},"modified":"2024-03-14T19:25:49","modified_gmt":"2024-03-14T19:25:49","slug":"regulatory-gap-exposing-kenyans-to-exploitative-loan-terms","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/kenya\/all-news\/regulatory-gap-exposing-kenyans-to-exploitative-loan-terms","title":{"rendered":"Regulatory gap exposing Kenyans to exploitative loan terms"},"content":{"rendered":"

Africa-Press – Kenya. <\/strong><\/span>A legal gap that prevents the Central Bank of Kenya from regulating buy-now-pay-later businesses could see borrowers continue to suffer higher interest rates and harsher repayment terms.<\/p>\n

This was revealed during a committee session between Central Bank Governor Kamau Thugge and members of Parliament on Thursday.<\/p>\n

The National Assembly Committee on Finance and National Planning sought to know the role of CBK in asserting control over the interest rates charged by firms involved in lending to Kenyans under the BNPL models.<\/p>\n

The committee chairman Kuria Kimani, pointed out that the regulations CBK is using to govern the sector are those of Digital Credit Providers and do not actively cover the BNPL firms.<\/p>\n

\u201cWe all need to agree that there is a gap because the matter in question does not fall under digital credit channel and that\u2019s why these people are exploiting our boda boda people because they don\u2019t fall under the DCPs,\u201d said Kuria.<\/p>\n

DCPs are regulated by the Central Bank of Kenya under the Central Bank of Kenya Act (Chapter 491) and the Central Bank of Kenya (Digital Credit Providers) Regulations, 2022.<\/p>\n

The MPs put Thugge to task to explain how the firms operating in the space fall under the regulations of CBK.<\/p>\n

Baringo North member of parliament Joseph Makilap argued that in the model there is no exchange of funds, but under the interest rates there is no clear guideline on how these businesses come under CBK oversight.<\/p>\n

\u201cIt is a hire purchase and we want to know if oversight of hire purchase companies falls under CBK and not under trade. Because we may be discussing something that doesn\u2019t fall under its mandate,\u201d<\/p>\n

The CBK had argued that the High Court in a 2022 ruling held that non-deposit-taking microfinance institutions are digital credit providers (DCPs) and are therefore subject to oversight by the Central Bank of Kenya (CBK).<\/p>\n

The DCPs that operate as banks or MNOs fall under the regulations or oversight provided by the Central Bank of Kenya, Communications Authority of Kenya, Competition Authority of Kenya, and Office of the Data Protection Commissioner.<\/p>\n

The Central Bank of Kenya (Amendment) Act] 2021 sought to bring on board previously unregulated fintech DCPs that leverage smartphone apps.<\/p>\n

Subsequently, the complying fintech DCPs were brought under the supervision of CBK and adherence to the requirements of Section 19 of the Data Protection Act, 2019.<\/p>\n

\u201cThere is this confusion that we are currently witnessing and that\u2019s why they are taking advantage. Do they fall under the CBK Act or microfinance regulations?\u201d paused the committee chair.<\/p>\n

The boda boda sector has emerged as one of the key sectors driving the uptake of the buy-now-pay-later models for devices and appliances.<\/p>\n

The model according to industry players has skyrocketed in popularity, especially among young and low-income consumers who may not have ready access to traditional credit. The legislators argue that this has exposed the victims.<\/p>\n

\u201cThis is a new area that is not properly regulated and does not have any supervision from CBK and many Kenyans have moved there. It is now upon MPs and CBK to see how we can protect Kenyans from this latest manipulation of business.\u201d Added Makilap.<\/p>\n

Central Bank acknowledged this as a legitimate concern and assured that a team will be set up to address the matters raised and seal any gaps that are currently in regulations.<\/p>\n

\u201cOnce we identify those gaps we can come back and see how to close all these gaps,\u201d added Thugge.<\/p>\n

For More News And Analysis About Kenya<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – Kenya. A legal gap that prevents the Central Bank of Kenya from regulating buy-now-pay-later businesses could see borrowers continue to suffer higher interest rates and harsher repayment terms. This was revealed during a committee session between Central Bank Governor Kamau Thugge and members of Parliament on Thursday. The National Assembly Committee on Finance […]<\/p>\n","protected":false},"author":84,"featured_media":114793,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,5],"tags":[6857,7003,544],"class_list":["post-114794","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-economy","tag-africa-press","tag-africa-press-kenya","tag-kenya"],"yoast_head":"\nRegulatory gap exposing Kenyans to exploitative loan terms - kenya<\/title>\n<meta name=\"description\" content=\"A legal gap that prevents the Central Bank of Kenya from regulating buy-now-pay-later businesses could see borrowers con ...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/kenya\/all-news\/regulatory-gap-exposing-kenyans-to-exploitative-loan-terms\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Regulatory gap exposing Kenyans to exploitative loan terms\" \/>\n<meta property=\"og:description\" content=\"A legal gap that prevents the Central Bank of Kenya from regulating buy-now-pay-later businesses could see borrowers con ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/kenya\/all-news\/regulatory-gap-exposing-kenyans-to-exploitative-loan-terms\" \/>\n<meta property=\"og:site_name\" content=\"kenya\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AfricaPressTunisiaa\" \/>\n<meta property=\"article:published_time\" content=\"2024-03-14T17:59:27+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-03-14T19:25:49+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/kenya\/sites\/28\/2024\/03\/sm_1710431426.174928.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1000\" \/>\n\t<meta property=\"og:image:height\" content=\"666\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"cfeditoren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"cfeditoren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.africa-press.net\/kenya\/all-news\/regulatory-gap-exposing-kenyans-to-exploitative-loan-terms#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/kenya\/all-news\/regulatory-gap-exposing-kenyans-to-exploitative-loan-terms\"},\"author\":{\"name\":\"cfeditoren\",\"@id\":\"https:\/\/www.africa-press.net\/kenya\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"headline\":\"Regulatory gap exposing Kenyans to exploitative loan terms\",\"datePublished\":\"2024-03-14T17:59:27+00:00\",\"dateModified\":\"2024-03-14T19:25:49+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/kenya\/all-news\/regulatory-gap-exposing-kenyans-to-exploitative-loan-terms\"},\"wordCount\":594,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/kenya\/all-news\/regulatory-gap-exposing-kenyans-to-exploitative-loan-terms#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/kenya\/sites\/28\/2024\/03\/sm_1710431426.174928.jpg\",\"keywords\":[\"Africa Press\",\"Africa Press-Kenya\",\"Kenya\"],\"articleSection\":[\"all news\",\"economy\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/kenya\/all-news\/regulatory-gap-exposing-kenyans-to-exploitative-loan-terms#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/kenya\/all-news\/regulatory-gap-exposing-kenyans-to-exploitative-loan-terms\",\"url\":\"https:\/\/www.africa-press.net\/kenya\/all-news\/regulatory-gap-exposing-kenyans-to-exploitative-loan-terms\",\"name\":\"Regulatory gap exposing Kenyans to exploitative loan terms - 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