Deadline for Licensing Unregulated Digital Credit Providers with Central Bank of Kenya is September 17th 2022”

On 18^th March 2022, the Central Bank of Kenya (CBK) published the Central Bank of Kenya (Digital Credit Providers) Regulations, 2022 that seek to regulate digital lending service providers. In a notice issued by the bank, all previously unregulated Digital Credit Providers (DCPs) were required to apply to CBK for a license within six months of the publication of the Regulations in accordance with Section 59(2) of the CBK Act or cease operations i.e., by 17^th September 2022.

CBK Licensing Requirements for Digital Credit Providers 

The Central Bank of Kenya (Digital Credit Providers) Regulations, were issued pursuant to Sections 57(1), 57(3) and 57(4) of the Central Bank of Kenya Act (the CBK Act). They provide for the licensing and oversight of previously unregulated Digital Credit Providers (DCPs) and aim to address their high cost, unethical debt collection practices, and the abuse of personal information.

Pursuant to Regulation 2; any person who wishes to carry to out digital credit business in Kenya shall apply to the Bank for a license accompanied by a Certificate of Incorporation, Memorandum and Articles of Association of the applicant and that of any significant shareholder and other constitutive documents. If satisfied that the applicant meets the requirements of these Regulations, the Bank shall grant a licence to the applicant, within sixty days of submission of a complete application.

Other documents required to be issued with a license include:

1. The information and communication technology system to be used in the applicant’s operations and an independent assurance on the systems;
2. An independent audit of the platform; delivery channels to be deployed as well as terms and conditions of credit products and services which the applicant intends to provide;
3. Agreements it has with Telcos and other service providers for provision of channel or platform for provision of the credit product; and
4. Such details as description and source of funds to be invested by the applicant, pricing model and parameters, certificate of good conduct, tax compliance certificate and CRB report for each shareholder, director and senior officer.