JMK Partners Advocate


In a market where the parties involved have an unequal bargaining power, it is inevitable that the weaker party may be disadvantaged. Therefore, the enactment of the Central Bank of Kenya (Amendment) Act, 2021 and the Central Bank of Kenya (Digital Credit Providers) Regulations, 2022 (the “Regulations) was essential to regulate the digital credit providers in order to enhance consumer protection as well as generally control the operations within the industry.

The Central Bank of Kenya (Amendment) Act, 2021 mandates the Central Bank of Kenya to regulate and licence digital credit providers. Therefore, any person who intends to carry out the business of providing credit facilities or loan services through a digital channel will be required to be licenced by the Central Bank of Kenya.

To enhance consumer protection in the digital lending industry, the Regulations have outlined various provisions to be implemented by digital credit providers, these entail:

Consumer information rights

Prior to the granting of a loan, the digital credit providers have an obligation to ensure that the terms and conditions of issuance of the loan are communicated to the consumer in a clear and transparent manner. Notably, such terms and conditions cannot be varied without a prior thirty (30) days notification to the consumer.

Consumers are also entitled to information relating to the fundamental benefits, risks and terms of the products or services offered by a digital credit provider.

Additionally, the consumers will be entitled to a comprehensive statement of transaction.

Provision of a limit on the amount of money that can be recovered from a consumer

The charging of excessive lending interest rates by the digital credit providers was one of the main woe that the consumers were exposed to prior to the enactment of the Regulations. To ease out the woe, the Regulations limit recoveries to (i) the principal owing when the loan becomes non­performing; (ii) interest not exceeding the principal owing when the loan becomes non­performing; and (iii) reasonable expenses incurred in recovering amounts owing.

Consumer complaints resolution

A digital credit provider is under an obligation to establish a system for customers to report complaints and to ensure that the complaints are handled either immediately or within a period of 30 days of the customer reporting the complaint. In addition, all records of customer complaints and the outcome of resolutions are required to be kept by the digital credit provider.

Exchange of information with the credit reference bureau

A digital credit provider shall not submit, to a credit reference bureau, negative information relating to a consumer where the amount in question does not exceed Kenya Shillings One Thousand. In addition, a digital credit provider shall give a consumer a notification of at least seven to thirty days prior to submitting the consumer’s negative information to a credit reference bureau. Besides, within thirty days of a digital credit provider submitting negative information to a credit reference bureau, the digital credit provider shall notify the consumer.

Collection of non-performing loans

The Regulations prohibit the use of threat, violence, obscene or profane language, harassment, abuse or oppression or any other improper or unconscionable debt collection tactics.

Data Protection

Digital credit providers are required to promote the protection of the personal data collected from their consumers. Such data shall be used for lawful manner. Consumers are also now entitled to opt out of marketing messages from digital credit providers.

Besides the provisions for licensing of digital credit providers as well as those for consumer protection, digital credit providers have also been placed under an obligation to promote anti-money laundering and combat financing of terrorism. The digital credit providers are also required to annually submit a return to the Central Bank of Kenya certifying compliance with the Regulations.

The digital credit providers contribute to the promotion of the economy by offering readily accessible funds to consumers, however, amidst the woes projected by the consumers, the enactment of the Regulations was crucial. At JMK Partners Advocates LLP, we are well versed with the provisions of the Regulations and are upto task in assisting the digital credit providers to comply with the Regulations.

This article is for informational purposes only and should not be taken to be or construed as a legal opinion. For more insights, please do not hesitate to contact