Digital lenders have now backed proposed regulations terming it a good move to push the loan prices down.
Digital Lenders Association of Kenya (DLAK) Board Chairman Kevin Mutiso said that the regulations, that will see them fall under Central Bank of Kenya (CBK) supervision put all players on an equal footing and a sign of maturity in the industry.
“We price our loans based on risk and a lot of the risks will be reduced by standardising certain things. Once the new standards take root we expect revision on the loan price,” said Mutiso.
“If passed, The Central Bank of Kenya (Amendment) Bill of 2020 bars digital lenders from operating without licences in a bid to streamline the industry.”
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Even though they have helped deepen financial access, the digital lenders have for a long time been accused of charging high-interest rates, using crude methods to recover loans, debt shaming and predatory lending tactics by offering loans to borrowers with no means to pay back.
General Manager Tala Ivan Mbowa added that contrary to public perception, they back the new rule but quick to say that the regulation should not stifle innovation.
“We have been working with legislators and potential regulators and have seen the benefits of regulation. We think it will help strengthen the industry as a whole and address customer trust issues,” he said.
The two spoke on Monday after the launch of a financial literacy campaign – a month-long event dedicated to bringing providers and consumers together in a conversation around financial health and wellness as Kenyans seek to rebuild their finances amid the post-pandemic economic fallout.
“We look forward to demonstrating our commitment to responsible lending by providing tangible information and tools (outside of providing credit line) to advance financial health,” said Mbowa.
