The Central Bank of Kenya (CBK) has been directed to suspend plans to introduce new regulations for digital lenders after Parliament raised concerns over some of the proposed provisions.
The National Assembly’s Committee on Delegated Legislation issued the directive on Thursday, November 12, saying the draft rules gave the regulator excessive powers and proposed penalties that were not allowed under existing law.
The committee also pointed out drafting inconsistencies that needed to be addressed before the regulations could be implemented.
The proposed Non-Deposit-Taking Credit Providers Regulations, 2025, were intended to bring more lending businesses under CBK supervision and strengthen protections for borrowers.
They cover digital lending apps, buy-now-pay-later services, asset financing companies and other businesses that offer credit without taking deposits.
Under the proposed rules, lenders with an initial capital of more than KSh20 million would be required to obtain a CBK licence, while those below that amount would have to register with the regulator.
The regulations also sought to control how lenders recover loans, particularly where borrowers fall behind on payments.
Among the proposed restrictions, lenders would be barred from threatening or abusing borrowers, using violence during debt collection or accessing borrowers’ phone contacts to shame them over unpaid loans.
They would also not be allowed to recover charges that had not been disclosed in the loan agreement.
However, MPs questioned provisions they said could allow CBK to exercise powers without clear limits.
Ainabkoi MP Samuel Chepkonga said the regulations should clearly state what lenders are required to do instead of leaving the regulator with broad discretion to introduce additional requirements.
He argued that vague provisions could deny Kenyans the right to know what the law requires of them and undermine public participation.
In addition to this, the committee was also not in agreement with the penalty of up to KSh2 million on the lenders who violate the guidelines.
According to the draft regulation, CBK could have imposed a penalty of up to KSh2 million or thrice the financial gain or loss avoided from the activity that violated the rules, depending on whichever is higher.
In addition to this, the lenders could have been liable to pay an additional daily fine of KSh10,000, depending on the time the violation lasted.
Chepkonga added that the penalty of up to KSh2 million that was proposed exceeded the maximum that can be prescribed by the Statutory Instruments Act.
According to him, this renders the provision of the regulation inconsistent with the law.
As such, the committee ordered CBK to consult the legal advisers of parliament to review and redraft the regulations before implementing them.
This means that the implementation of the proposed regulations will be put on hold for now.