CBK probing 400 digital lenders over fraud concerns

With rising concerns over digital lenders offering predatory loans at high interest rates, the Senate finance committee sought to know 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 after it emerged that most of the lenders were unregulated putting millions of unsuspecting members of the public at risk.

“We realise that the DCP were not really consumer friendly that is why we brought them under CBK, we have license 32 quite a number a remaining,” CBK Governor Dr Kamau Thugge told senators.

The senate's inquiry was triggered by petitions from members of the public on four micro-lending entities imposing huge interests against the provisions of the digital credit providers regulations of 2022.

CBK will within a fortnight furnish the committee with a report detailing an audit of the digital lenders and steps taken to reign in on the rotten apples.

Meanwhile, with the performance of the Kenya shilling against other currencies still under scrutiny, the CBK governor outlined steps taken by the government to prevent it from dwindling further.

“In January we expect 682 million dollars to come from the IMF, we also have some funds from the trade debt bank in the next two weeks, and we also have funding from AfroExim and World Bank we expect to reduce domestic borrowing, this should lower interest rates, we will see stability in the exchange rate because of external financing,” Thugge said.

The committee is also probing reported cases of collusion between fraudsters and banks resulting in the withdrawal of clients' money, CBK saying they are reviewing the policy guideline to slap guilty parties with a 20 million penalty up from one million shillings.