Digital lenders name and shame rogue peers as CBK noose draws closer

The Digital Lenders Association of Kenya (DLAK) has named and shamed rogue practices by two non-members Opesa and Okash.

The two non-member digital lenders have been indicted for poor debt-shaming practices in debt collection whereby reports have emerged of the two reaching out to contacts on the customers’ phone book to try and get them payback a loan.

“Not only does this behaviour go against Kenyan data protection laws, but it reeks of indignity. By reaching out to a customer’s contact list, Opesa and Okash rob the individual of basic dignity and consumer rights. This can have long term effects on their psychological well-being and damage relations that may have taken years to build” said DLAK Chairman Robert Masinde.

The first ever condemnation of a peer by the digital lenders comes even as the Central Bank of Kenya (CBK) pursues regulations to tame the credit only start-ups following numerous complaints by Kenyans.

A case of the pot calling the kettle black?

However, the bundled attack on Opesa and Okash comes even as an indiscriminate condemnation of most of the digital lenders persists as Kenyans continue to tell off untold suffering under the hands of the lenders.

The digital lenders have come under fire for slapping users with high fees and interest rates on loans and the deployment of overreaching policies to recover debt.

In the most recent, the digital lenders have come under fire for loan denials against hardships brought about by the Covid-19 pandemic which has seen counterparts in banking offer moratoriums to borrowers.

In spite of taunting themselves as rapid credit facilities to users, Kenyans have reported delays to the processing of loans under the pandemic.

“Due to the Covid-19 crisis, decisions on loan applications will have delays of up to 10 days,” read a prompt from loan app firm Tala.

Central Bank (Ammendment) Bill

The CBK is meanwhile moving to hasten the regulation of the sector through ammendments to the Central Bank Act which with enact protocols to bring the players under its wings.

CBK Governor Patrick Njoroge has in the most recent warned the existing regulatory arbitrage must cease to protect Kenyans.

“It’s never too soon to do the right thing, pandemic or not. People have suffered. One is minding their own business only to get a call from deep from their rural area on why they have not paid their loan,” he said

“Imagine if we called your boss to say you owe us serious money only for the debt to turn out to be Ksh.2000. What would happen?”

The new regulations are expected to address concerns on digital lenders including borrowers’ indebtness, financial integrity and consumer protecting by empowering the CBK to manage the credit only entities.

In Mid-April, the CBK began the process by kicking out the digital lenders from the credit information sharing (CIS) barring the entities from listing Kenyans on Credit Reference Bureaus (CRBs)

The CBK has previously warned that it will not hesitate to kick out apps that refuse to be scrutinized terming their contribution to Kenyans as negligible.

“These are little fleas. Their output in terms of credit is less than 0.14 percent, that’s less than the smallest bank around but in terms of noise and pain to Kenyans they are at 90 percent,” added Dr. Njoroge.