The Central Bank of Kenya (CBK) has set a Sh1 million fine for late payment of annual fees by non-deposit-taking credit providers (NDTCPs), adding to an array of steeply increased compliance fees for this group.
Freshly published regulations by CBK Governor Kamau Thugge said that NDTCPs that failed to pay the annual fee by December 31 of each year would pay the Sh1 million. The fine was not provided in the earlier draft regulations published by the apex bank last year.
Apart from the fine, the CBK has set an application fee of Sh100,000 for both licensing and registration of NDTCPs and Sh500,000 for licensed entities and Sh250,000 for registered ones.
This marks a steep increase from the previously applicable fees under the Digital Credit Providers (DCPs) regulations, where the application fee was set at Sh5,000, and the annual fee was Sh20,000.
The NDTCP regulations follow amendments to the CBK Act (Cap 491) vide the Business Laws (Amendment) Act, 2024. The amendments are aimed at, among others, clarifying and widening the scope of operations of NDTCPs, formerly DCPs.
The new regulations place big emphasis on consumer protection, with the CBK setting tough terms on key areas such as credit terms and handling of personal information.
‘A non-deposit taking credit provider shall formulate a credit policy consistent with the Act….. The credit policy shall be aligned to the size of the non- deposit taking credit provider, and the nature and complexity of the products offered by the non-deposit taking credit provider,’ the CBK said.
‘A non-deposit taking credit provider shall not introduce a new non-deposit taking credit product to the market or vary the features of an existing product, including the interest rates, without the prior written approval of the Bank.’
CBK said that NDTCPs proposing to change product features or interest rates will have to justify the variations and notify their customers of the planned changes at least 30 days before they take effect.
The CBK said the credit firms will be required to provide a unique identifying account number issued by a mobile money operator to be used for disbursements and repayments of loans; the app-based platforms to be launched; and the name of the bank and number of accounts to be operated.
‘With respect to app-based and other digital platforms, a non-deposit taking credit provider shall make provision for unsubscribing or opting out from the service, including from receiving marketing messages upon full repayment of the loan and from receiving marketing and promotional communication,’ the regulator said.
The CBK said that subject to its credit policy, a non-deposit taking credit provider may restructure a loan in terms of instalment amount, payment period or other terms upon receipt of a request from a borrower or on prior notification to the customer.
‘A non-deposit taking credit provider shall be limited in what it may recover from a customer with respect to a non-performing loan to the maximum amount under paragraph (2). Limit on interest recoverable from non-performing loans,’ the bank said.