Kenya’s digital credit providers (DCPs) are now under CBK supervision after the CBK Act was amended in December 2024. The changes replace the term **“digital credit business”**with “non-deposit taking credit providers (NDTCs),” tightening the regulatory grip on digital lenders.

The reforms come in the wake of predatory lending, privacy breaches and hidden fees affecting over 8 million borrowers in Kenya.

Key Changes for Digital Lenders

1️⃣ Sector Reclassification

  • Digital lenders are now classified as NDTCs.

  • They must meet tougher compliance and reporting requirements under CBK.

2️⃣ Interest Rates & Pricing

  • CBK has introduced pricing regulations to curb exorbitant interest rates.

  • This is to prevent borrowers from falling into debt traps caused by high rates and hidden charges.

3️⃣ Data Protection

  • All digital lenders must register with ODPC.

  • Lenders must strengthen data security and stop debt collection harassment such as unauthorized access to contact lists.

4️⃣ Strict Enforcement & Penalties

  • Non-compliance attracts fines of up to KES 5 million and license revocation.

  • CBK has a zero-tolerance policy for breaches.

5️⃣ New Requirements

  • Digital lenders must have a minimum capital of KES 100 million.

  • They must undergo board composition audits and meet regulatory requirements within 6 months.

  • This is to chase away rogue lenders and stabilize the sector.

📌 Deadline for Full Compliance: June 28, 2025

Digital Lenders & Borrowers

CBK regulated digital lenders in 2021 and the Digital Credit Providers Regulations, 2022 followed. Many lenders applied for licenses but compliance has been a challenge.

🔹 Only 85 of 730 applied were licensed by CBK as of October 2024.
🔹 Many small lenders will struggle to meet the new financial requirements.
🔹 Mergers and acquisitions will increase as firms try to comply with CBK’s tough rules.

What does this mean for Borrowers

✅ Lower interest rates & transparency – Borrowers will get regulated pricing and fewer hidden fees.
✅ Stronger data protection – Digital lenders will stop misusing personal data for debt collection.
✅ Fewer predatory lenders – Stricter licensing will weed out unethical players in the market.

Conclusion

CBK’s regulatory squeeze is set to reshape Kenya’s digital lending space by putting borrower protection, transparency and financial stability first. Compliance will be tough for lenders but this is a good news for consumers who have suffered from unethical lending for long.

🔹 Deadline: June 28, 2025
🔹 Tougher enforcement & penalties for non-compliant lenders