Digital Lending Amendment Bill
Digital money lending agencies have been dealt a blow as they will have to comply with data protection laws or risk having their operating licenses cancelled if the Central Bank (Amendment) Bill, 2021 sails through.
On Friday 6th August 2021, the National Assembly Committee on Finance and National Planning has asked the Central Bank of Kenya to collaborate with the Communication Authority of Kenya (CA) and the Office of the Data Protection Commissioner to audit the digital lenders’ compliance to data privacy.
This is likely to limit high cases of debt-shaming in the country identical to digital lenders.
Digital lenders have in recent times gained access to borrowers’ mobile phone contacts, texted or called friends and relatives demanding repayment of loan arrears without consent or knowledge of their clients.
”This is an extreme breach of data protection laws and should be dealt with accordingly,” the Gladys Wanga led committee said in the report.
The Digital Lenders Association of Kenya (DLAK) got a win in their pursuit of bad debtors as they will be allowed to list borrowers with credit reference bureaus (CRBs) under the proposed ‘Digital lenders’ law.
This follows lobbying by not just the coalition of digital lenders but also the Central Bank of Kenya (CBK).
“The Committee agreed to the proposal so that the digital lenders are allowed to disclose any positive or negative information of its customers to the licensed credit reference bureaus,” reported the national assembly Finance and Planning Committee
Since April 2020 digital lenders were ejected from using the system by CBK abuse of the credit sharing platform multiple lenders.
DLAK has been pushing for the return of digital lenders to the infamous CIS system as a consequence to those failing to adhere to debt repayment agreements.
The proposed guidelines come at a point when digital lenders have been accused of unethical debt collection tactics and also exploitation with their high digital lending rates
“Rouge actors will have a very hard time operating. If they breach the regulation this will see the company and its directors taken to court,” added Kevin Mutiso, Chairman, DLAK.
Failure to comply with the new regulations within the bill if passed will lead to action being taken against the lenders.