Non-deposit-taking credit providers in Kenya have until March 29, 2027, to apply for licensing or registration under an expanded regulatory framework by the Central Bank of Kenya (CBK), marking a significant shift in oversight of the country’s lending industry.
The new rules extend supervision beyond digital loan applications to a broader range of businesses that provide credit without taking deposits. They replace the 2022 Digital Credit Providers Regulations and implement amendments to the Central Bank of Kenya Act introduced in 2024.
Lenders that are not already regulated must submit applications by the deadline, although they can continue operating while their applications are being considered.
The changes bring more lenders within a common regulatory framework as Kenya seeks to strengthen consumer protection, improve transparency in lending and address concerns over debt collection practices.
New Rules on Loan Repayments and Debt Recovery
Under the regulations, lenders must apply borrower repayments first to the loan principal, followed by fees and charges, and finally interest. The provision changes the repayment allocation approach from that contained in an earlier draft of the rules.
The framework also introduces obligations covering loan pricing, governance, debt recovery and the use of artificial intelligence in credit assessments.
Lenders using automated systems to evaluate borrowers will face additional controls around credit assessment processes. The regulations also provide procedures for classifying non-performing loans, bringing greater structure to how credit providers manage overdue facilities.
For borrowers whose movable property is at risk of being sold to recover outstanding debt, lenders must provide at least 30 days’ notice before the sale. The requirement introduces an additional safeguard for consumers facing enforcement action.
Wider Scope for Credit Providers
The expanded framework covers more than app-based lenders, potentially bringing other non-deposit-taking businesses involved in consumer and commercial lending within the CBK’s regulatory perimeter.
The rules expressly permit stock-now-pay-later financing, allowing customers to obtain goods and pay for them later under qualifying arrangements.
However, a licence to operate as a credit provider does not authorise a business to accept savings deposits or operate investment accounts. Such activities remain outside the permitted scope of the licence.
The immediate priority for affected providers is to establish whether their activities fall within the expanded framework and complete the necessary licensing or registration process before March 29, 2027.