The Central Bank of Kenya (CBK) has said it will launch a service that gives a mark of approval to mobile lending firms, in a bid to protect customers from unregulated mobile lenders.
Dr. Patrick Njoroge, Governor of Central Bank on Monday said there are two sets of digital lenders in the financial markets where one group is regulated because they are operated by commercial banks while the others are not.
“The credit only digital lenders that provide lending on mobile phones are not regulated and this is a major gap in the law,” Njoroge said during the inaugural Afro-Asia FinTech Festival.
“The fact that digital lenders are not regulated is a fundamental problem because there is no assurance that consumers are not being taken advantage of,” he added.
Apps that are already regulated by CBK include M-shwari, Fuliza, KCB-Mpesa, Stawi for SMEs and other online financial products offered by local commercial banks.
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Njoroge noted that unregulated mobile money lenders could also face cybersecurity risks.
“The fact that no regulator is monitoring them also means that there are money laundering risks because we don’t know where the money for onward lending is coming from and this is a major risk to the economy,” the governor said.
“So, we need to deal with the unregulated digital lenders as a country and jurisdiction and this is what regulators do,” Njoroge said.
