At least five new players are expected to join the lucrative digital lending business if their licenses are approved by the banking regulator, in what promises to increase competition in the sector that is now coming under regulation.
The Central Bank of Kenya is currently receiving applications from current and new players eyeing the sector ahead of the September 17 deadline.
Members of the Digital Lenders Association of Kenya (Dlak) numbering 16, scores of independent operators, non-deposit-taking saccos and about five new entrants have made applications for a license from the regulator.
Dlak chairman Kevin Mutiso said they are engaging with the regulator through the licensing process and CBK has assured them they will stick to the deadline for approvals.
“My members have applied, I understand that there are several others including five new entrants who want to come in. CBK has been very supportive throughout the process and although no player has received approvals, they said they are still on course for the September deadline,” Mr Mutiso said.
President Uhuru Kenyatta last December approved a change in the law that allowed the central bank to regulate digital lenders, a move that gave the bank power to rein in those who violate consumer privacy.
MP’s enacted the Digital Credit Providers Regulations, 2021 which required digital lenders to apply for licenses as compared to previously, when they only had to register to set up operations.
Under the new rules, lenders were supposed to furnish the regulator with a Certificate of Incorporation, Memorandum and Articles of Association of the applicant and that of any significant shareholder.
Directors, Chief executives, Senior Officers and significant shareholders would also undergo a fit and proper test from the regulator.