Cabinet Secretary for the National Treasury and Economic Planning John Mbadi told the Senate that new regulatory and policy interventions are being enforced to curb predatory lending and safeguard consumers from exploitation.
Responding to concerns raised by Kisumu Senator Tom Ojienda through Bungoma Senator Wafula Wakoli, Mbadi said the Central Bank of Kenya (CBK) now requires all Non-Deposit Taking Credit Providers (NDTCPs), formerly known as Digital Credit Providers, to be licensed under a strengthened regulatory framework.
“These measures ensure compliance with the law and, most importantly, protect customers’ interests and prevent rogue lenders from violating consumer rights,” Mbadi said.
Stricter licensing framework
Under the framework, digital lenders must meet strict eligibility criteria, governance standards, and operational rules before receiving approval to operate. The regulations also spell out consumer protection obligations, including transparency in pricing, fair debt collection practices, and disclosure of loan terms.
Mbadi noted that CBK is working closely with the Office of the Data Protection Commissioner to enforce data privacy standards in the sector.
“CBK requires all licensed NDTCPs to fully comply with the Data Protection Act. As part of licensing, providers must obtain a certificate from the ODPC and develop a robust data protection policy,” he said.
The policy must clearly outline how personal data is collected, processed, stored, and safeguarded, ensuring fair and transparent handling of customer information. Authorities say the licensing regime has already helped reduce cases of exorbitant interest rates, harassment of borrowers, and misuse of personal data.
Digital lending market snapshot
Mbadi told Senators that CBK currently supervises three categories of lenders: 38 commercial banks, 14 microfinance banks, and 195 licensed NDTCPs.
As of December 2025, commercial banks had advanced Ksh4,369.6 billion in credit, representing 96.8 per cent of total lending. Microfinance banks issued Ksh32.7 billion (0.8 per cent), while digital credit providers accounted for Ksh110.5 billion, equivalent to 2.4 per cent of total credit in the economy.
The CS also cited monetary policy interventions aimed at easing the cost of borrowing. In December 2024, CBK reduced its benchmark rate from 13 per cent to 11.25 per cent, a move he said contributed to a 1.4 per cent rise in credit to Ksh7,140.3 billion by commercial banks and non-bank financial institutions.
Poverty reduction and social protection
Beyond digital lending reforms, Mbadi updated the Senate on broader poverty reduction measures. According to the 2022 Kenya Continuous Household Survey, national poverty stands at 39.8 per cent, with 22 counties recording levels above the national average.
Counties such as Turkana, Mandera, Samburu, Garissa, Tana River, Marsabit, Wajir, West Pokot, Kitui, Isiolo, Elgeyo Marakwet, Busia, and Kwale report poverty rates exceeding 50 per cent.
The government, he said, has introduced targeted conditional grants, social protection initiatives, and sector-specific funding in health, urban development, and road maintenance to address disparities.
“We are improving beneficiary identification using national databases, including the Single Registry, to reduce duplication and ensure support reaches the most vulnerable,” Mbadi stated.
0 Comments