CBK Compels Mobile Money Lenders To Reveal Hidden Charges.

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Mobile Loan Lenders to Reveal Hidden Fees from September

KEY POINTS

According to CBK, the new directive is part of the laid conditions for fresh licensing of the digital mobile lenders, which will help in remitting cases of loan overpricing and misuse of customers’ data.

 

Mobile Loan Lenders

KEY TAKEAWAYS

Digital lenders will now be required to set interest rates for their loans within parameters approved by the CBK to protect borrowers against predatory lending that has driven many into the debt trap.

The Central Bank of Kenya (CBK) demands mobile lenders to reveal the total charges of their loans from September. Before granting credit to customers, this will include interest rates, late payment, and rollover fees.

 

 

 

 

According to CBK, the new directive is part of the laid conditions for fresh licensing of the digital mobile lenders, which will help in remitting cases of loan overpricing and misuse of customers’ data.

 

 

 

 

CBK governor Patrick Njoroge said the new law would see customers benefit from lower credit service charges.

 

 

 

‘’We have been having issues with mobile lenders, and I would like to announce that the law is there and it will streamline the industry. Arising issues of overpricing misuse of customers’ data will be taken care of in the new law they have to comply with by August 2022,” CBK Governor Patrick Njoroge said on Tuesday.

 

 

 

 

CBK noted that most Kenyans acquiring digital loans are not aware of their rights, so they are victims of overpriced credit limits, resulting in massive debt.

 

 

 

The new directive follows the signing of law the Central Bank Bill 2021 by President Uhuru Kenyatta that brought digital lenders under the watch of the banking regulator for the first time in December.

 

 

 

 

 

The CBK act 2021 requires lenders to seek approval from the banking regulator to price their loans and products, subjecting them to the same rules as commercial banks. In addition, the law grants CBK powers to revoke permits of digital lenders who breach rules on confidentiality while pursuing defaulters.

 

 

 

 

The laws come after customers raise the alarm on being pursued by the lenders in shameful ways like accessing their phonebooks and informing the defaulters’ friends and families via contact information.

 

 

 

“An applicant shall provide the terms and conditions applicable to the digital credit and which must be accepted by the borrower before activation of a mobile loan account,” the new law states.

 

 

 

 

According to CBK, lenders’ failure to disclose the complete information on loan facilities to borrowers will attract suspension of licenses.

 

 

 

 

Digital lenders will now be required to set interest rates for their loans within parameters approved by the CBK to protect borrowers against predatory lending that has driven many into the debt trap.

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