Handle lenders with care – Business Daily

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Handle lenders with care


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Summary

  • The Central Bank of Kenya (CBK) should be careful to ensure that it plays the role of a neutral referee in the regulation of the sector.
  • These mobile lenders can fill a gap in access to credit giving money to those who would not otherwise get it from formal lenders such as banks.

The news that regulations governing digital lenders will be gazetted by the end of this month should sound a final warning to rogue lenders that time is running out for them to clean up their act or risk missing out on licenses in September.

But the Central Bank of Kenya (CBK) should be careful to ensure that it plays the role of a neutral referee in the regulation of the sector which if well managed has the potential to democratize formal credit in the economy.

These mobile lenders can fill a gap in access to credit giving money to those who would not otherwise get it from formal lenders such as banks.

It is for this reason that the CBK must make sure that the new regulatory role does not kill this nascent segment of the financial sector, but rather strengthen it.

To do so, it is necessary to weed out the predatory lenders who have soiled the sector’s name by bringing in stringent licensing requirements. It is equally important to protect the good lenders from rogue borrowers who habitually refuse to pay up.

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