Twelve firms under the umbrella Digital Lenders Association of Kenya (DLAK) have signed a code of conduct to cap initial lending at a maximum of Sh4,000 to customers with no borrowing history.
The newly formed lobby says this will ensure member firms match customer debt levels with repayment ability so as not to plunge borrowers into over indebtedness.
DLAK chairman Robert Masinde says the entry of many new players into the digital lending segment has led to a “disorderly and chaotic” industry that has seen many companies raise loan limits drastically to the pain of customers.
“It is not unusual to find rogue players emerging in such an infant industry. We are concerned with malpractices that have emerged. We can’t just wait for somebody to regulate us. We have to take the first step,” said Mr Masinde in a briefing in Nairobi on Thursday.
Lenders who inked the code of conduct include Tala, Alternative Circle, Stawika Capital, Zenka Finance and MyCredit.
Others are Okolea, Lpesa, Kopacent, Four Kings Investment, Kuwazo Capital and Finance Plan who also pledged to protect customer data and fully disclose pricing of their loans.
The lobby is hoping to incorporate other players in the increasingly competitive lending segment into inking the code.
In addition, customers will get access to in-app digital borrowing history and repayment behaviour which will also be accessed by all DLAP members so as to determine how much to lend to a customer.
“Where possible, lenders will attempt to help contactable customers to restructure their debt or otherwise make every reasonable effort to help their customers return to good standing,” reads the code in part.
The move comes at a time the Central Bank of Kenya governor Patrick Njoroge has hinted at having all financial services and products approved by the regulator.