New proposals in the Business Laws (Amendment) Bill, 2024 published on 1st November, 2024 seek to regulate non-deposit taking institutions under both the Microfinance Act and the Central Bank of Kenya Act (“CBK Act”). The proposed amendments to the CBK Act aim to expand the definition of digital credit providers (“DCPs”) to include non-deposit taking microfinance banks. If enacted, non-deposit taking microfinance banks currently regulated under the Microfinance Act could be considered DCPs and therefore fall under the purview of the CBK. The CBK has been advocating for an expanded regulatory mandate to oversee all credit providers, aiming to tackle issues such as excessive interest rates, unfair debt recovery practices, and misuse of the data of borrowers. However, the proposed changes have triggered debate as non-deposit taking microfinance banks risk being subject to dual licensing under two separate legal frameworks creating potential duplication in licensing and compliance requirements.
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