Central Bank of Kenya (CBK) has been given the green light to regulate monthly interest rates charged by digital mobile lenders and borrowers’ non-performing loans in honour of fallen Bonchari MP Oroo Oyioka.
MPs eulogised the Bonchari legislator the late Oroo Oyioka and the late Garissa Senator Yusuf Haji as devoted legislators.
Oroo Oyioka had sponsored the Central Bank of Kenya (Amendment) Bill, 2020 that is before Parliament for debate.
A key aim of the Bill is to curb the steep digital lending rates that have plunged many borrowers into a debt trap as well as predatory lending.
The digital lenders will operate under the same rules as commercial banks, including having to seek the CBK’s nod for new products and pricings if the Bill becomes law.
Tens of unregulated microlenders have invested in Kenya’s credit market in response to the growth in demand for quick loans.
Their proliferation has saddled borrowers with high interest rates, which rise up to 520 per cent when annualised, leading to mounting defaults and an ever ballooning number of defaulters who have been adversely listed with credit reference bureaus.
The Bill also comes amid complaints that digital lenders do not provide full information to borrowers on pricing, punishment for defaults and recovery of unpaid loans.
“In honour of the late Honourable Oyioka, I urge the relevant Departmental Committee to consider taking up the Bill and moving its consideration in the pending stages,” Speaker Justin Muturi said while issuing communication on the death of Mr Oyioka.
Nominated MP Gideon Keter has since published a similar Bill that require CBK to license all mobile loan providers.