Digital mobile lenders have suffered another blow after senators called for stricter measures on Tuesday the 1st of December 2020.
The Finance and Budget Committee also put the Central Bank of Kenya (CBK) governor Patrick Njoroge on the spot. They questioned how the lenders were charging interest rates of up to 40%, which is nearly triple CBK’s interest rate.
According to the Committee, Njoroge should control the apps as they are milking Kenyans dry.
The committee led by Kirinyaga senator Charles Kibiru dismissed Njoroge’s plea that there needs to be a law before the government can address the issue.
Kericho Senator Aaron Cheruiyot also questioned how CBK was allowing the mobile lenders to be in operation despite the high-interest rates. Makueni Senator Mutual Kilonzo also reiterated his colleagues’ words bashing the government for letting the digital mobile lenders harass Kenyans.
CBK governor Njoroge did not dispute the legislators’ points of view but instead acknowledged the concern.
He, however, added that only a new law could curb the digital mobile lenders’ mischievousness. Njoroge also noted that some schemes are money laundering schemes.
According to him, this is part of the reason the CBK prohibited the mobile digital lenders from listing anyone in the Credit Reference Bureu (CRB).
“Once the bill is passed, we will come out with regulations, but I must say the matter is urgent, and I think you are the people that see it more than us because I am sure people have come to you seeking redress from the damage that has been caused to them,” Njoroge said.
In recent years, the mobile digital money lending industry has exploded with over 100 digital lenders in Kenya. However, many Kenyans have fallen into the trap of borrowing, with some finding themselves in CRB after they fail to repay the loans.