Lewis Njoka @LewisNjoka
Digital lenders are calling for talks with the financial industry stakeholders to develop a mechanism for self-regulation. They said it would be erroneous to have them regulated under Central Bank of Kenya (CBK), as they do not take customer deposits.
Digital Lenders Association of Kenya Chairman Robert Masinde said the association wants to engage with CBK, Ministry of Finance, Communications Authority of Kenya, and others to find how best the sector could be regulated without undue external interference.
He proposed to protect borrowers from fraudsters through a code of conduct enforced via a peer review mechanism. He acknowledged that some lenders purporting to give loans via digital apps were not genuine.
“There is a need to review lending charges, protect customer data and weed out rogue lenders in the industry and this can best be done by lenders themselves. Once, we have such a mechanism in place, those among us exploiting customers will automatically find themselves out of business,” he said.
Masinde was speaking on the sidelines a Safaricom event to launch an anti-fraud tool for financial institutions that seeks to deal with fraudulent transactions that occur through SIM card replacement in Nairobi yesterday.
He said the biggest problem in the digital lending industry right now is lack of pricing transparency which exposes customers to exploitation by rogue lenders.
Masinde also called for the review of rate caps on banks, saying it was hurting the same borrowers it was to protect since even digital lenders borrow from the banks.