The Central Bank of Kenya (CBK) has listed 400 loan apps under probe, otherwise known as Digital Lenders who are offering their services at an exorbitant interest rates.
The Senate Finance Committee has sought answers from the Central Bank of Kenya whether it had instituted a predatory lending detection system and whether as the regulator, they had reined in on entities abusing the laws.
This comes after there was concerns about high interest rates among the digital lenders who are thus putting millions of unsuspecting members at risk. This means the CBK as a regulator should act and stop the fraudulent schemes by the lenders.
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CBK Governor Kamau Thugge said that the loan apps are under CBK becaof their unfriendliness to the consumers. But still, most of these lenders are still not compliant and registered under CBK.
“We realise that the Digital Credit Providers were not really consumer friendly that is why we brought them under CBK, we have license 32 quite a number a remaining.”
The loan apps under probe came after members of the public raised concerns over four micro-lending entities imposing huge interests against the provisions of the digital credit providers regulations of 2022.
The Committee has therefore given CBK a period of two weeks to compile a report of the digital lenders audit. This will also include a report on whether they have identified those lenders who are non-compliant to the 2022 regulations.
Additionally, the committee is probing cases of financial fraud through various banks. This is through reported cases of collusion between fraudsters and banks resulting in the withdrawal of clients’ money.
According to CBK, they are reviewing policy guidelines over the same to raise penalties from One Million to 20 Million shillings for the parties involved in the bank fraud.