‘Shylock’ Mobile-based lenders to be wiped out

Picha inayohusianaHave you been a customer for mobile loan applications such as Tala, Okash or even branch? If yes here is the damning report that 

Recently the central bank of Kenya undertook what we understand as the first major effort to understand the size of the Kenyan lender’s market. The report highlighted revealed that as at the end of 2018, the amount of outstanding loans and advances issued by Kenyan lenders stood at KSh2.5 trillion an amount that is equivalent to 52% of Kenya’s real GDP.

According to Kenya Bankers Association (KBA)  this market went through the boom and bust cycle between 2003 and 2018 to hit a record high of KSh2.5 trillion from KSh264 billion.

While there has been considerable attention by policymakers on bad loan interest rates taken out for the 2013-2018 year, outstanding loan debt owed by existing borrowers continues to swell.

The damning revelation has now put all mobile loan operators on the spot with the Central Bank of Kenya (CBK) calling for the regulation of all mobile loan providers under new strict guidelines stipulated in the Banking Charter, and which came into effect on May 2019.

Central bank Governor Patrick Njoroge said some of the firms operating mobile phone loan applications would be wiped out, “as they are simply fancy shylocks.” Under the proposed guidelines in the CBK Banking Charter, lenders will first have to text borrowers the terms of a mobile loan before approving it.

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