Digital lenders will now be barred from accessing customers' contact lists in the course of debt collection under new CBK regulations.

According to the Central Bank of Kenya (Digital Credit Providers) Regulations, 2022, a digital credit provider, its officers, employees, or agents shall also not, in the course of debt collection, use obscene or profane language with the customer or the customer's contacts for purposes of shaming them.

The Central Bank of Kenya has in the past raised concerns about the abuse of the personal data of borrowers by digital lenders.

The apex bank in turn called on lawmakers to fast-track legislation to provide for the regulation of digital lenders.

Under the new regulations, the digital lenders will also not use threat, violence, or other means to harm a customer, or his reputation or property if they do not settle their loans.

The regulations seek to address concerns raised by the public given the recent significant growth of digital lending, particularly through mobile phones. 

"These concerns relate to the predatory practices of the previously unregulated digital credit providers, and in particular, their high cost, unethical debt collection practices, and the abuse of personal information," said CBK.

The lenders under these regulations will also be barred from posting a customer's personal or sensitive information online or on any other forum or medium for purposes of shaming them.

They shall also not engage in any other conduct whose consequence is to harass, oppress, or abuse any person in connection with the collection of a debt.

Failure to comply with this regulation will incur a monetary penalty on a digital credit provider in an amount not exceeding Sh500,000.

Digital lenders have in recent years flooded the local market, attracted by demand for quick credit that does not require collateral.

Borrowers get loans within minutes via their mobile phones, making digital loans a quick fix for day-to-day bills.  By Susan Nyawira, Capital News