CBK to Regulate All Lenders with Over KSh 20M Activity
For the first time in its history, Kenya’s dynamic and rapidly expanding credit market is on the cusp of significant structural change. The Central Bank of Kenya (CBK) is poised to introduce a comprehensive regulatory framework, extending its oversight to every non-deposit-taking lender operating within the country. This groundbreaking move aims to bring order and accountability to a sector that has, until now, largely operated without a unified rulebook, impacting everything from innovative buy-now-pay-later (BNPL) platforms to peer-to-peer lending services and traditional hire-purchase firms.
Unpacking the New Regulatory Framework
Under the proposed draft regulations, any credit-only provider engaged in substantial financial activity will now fall directly under the CBK’s purview. Specifically, firms with at least KSh 20 million (approximately $155,000 USD) in capital, borrowings, or outstanding loans will be mandated to acquire a full license from the Central Bank. This significant threshold aims to capture the larger, more influential players in the market, ensuring robust oversight of their operations. While the focus is on these larger entities, smaller credit providers will not be entirely exempt; they will still be required to register with the regulator. Crucially, as these smaller players grow and their activities surpass the KSh 20 million threshold, they will be required to upgrade their registration to a full CBK license, ensuring continuous regulatory alignment with their scale of operations. These forthcoming rules are set to reshape the competitive landscape, fostering a more transparent and secure environment for both lenders and consumers in Kenya’s evolving financial ecosystem.
The introduction of this rulebook by the CBK marks a pivotal moment for Kenya’s credit market. It signifies a clear commitment to fostering a stable and transparent financial ecosystem, where accountability is paramount. By bringing previously unregulated entities under direct supervision, the CBK aims to enhance consumer protection, mitigate risks, and promote responsible lending practices across the board. Once these comprehensive rules are formally published, they are expected to usher in a new era of regulated financial services, solidifying Kenya’s position as a leader in financial innovation while ensuring robust oversight for sustainable growth in its vibrant digital economy.
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