The Central Bank of Kenya (CBK) has opened public participation on a new regulation which could bring non-deposit taking businesses offering credit to Kenyans through services such as buy-now-pay-later financing under its watch.
The Draft Non-Deposit Taking Credit Providers Regulations, 2025 proposes to give the central bank powers to regulate the industry where license will be granted to investors with an initial capital of Ksh 20 million.
The draft law comes at a time buy-now-pay-later (BNPL) business practice has gained popularity among Kenyan consumers amid economic hardships.
The firms which offer credit under such arrangement have been outed for exploiting consumers given the high interest rates consumers are charged for purchasing goods such as solar panels, mobile devices, motorbikes under BNPL terms.
According to Research and Markets, Kenya’s BNPL payment market is expected to record an annual growth rate of 13.6pc to reach Ksh 152 billion this year and Ksh 240 billion by 20230.
Other businesses being targeted include, asset financing whether directly or through a third-party financier, pay as you go arrangements, and peer to peer lending under collective investment schemes regulated under the Capital Markets Act.
Should the law be adopted, not-deposit taking business who have already loaned out in excess of Ksh 20 million will be required to apply for a license before resuming operations.
“A person shall not establish or carry out non-deposit-taking credit business in Kenya or otherwise hold himself out as carrying out non-deposit-taking credit business unless that person is licensed or registered by the Bank in accordance with these Regulations, or is a person whose non-deposit-taking credit business is regulated under any other written law,” states the draft regulation.
CBK is backing the proposals to address industry concerns such as Digital Credit Providers Regulations, 2022 which has since addressed issues like high cost of loans, unethical debt collection practices and abuse of personal information by digital lenders.
“Whilst great progress was achieved in the regulation and supervision of DCPs, including the licensing of 126 DCPs to-date, many challenges continued to affect the effectiveness of the legal and regulatory framework for DCPs. In that regard, the CBK Act was further amended by the Business Laws (Amendment) Act, 2024, to inter alia widen the scope of the operations of NDTCPs. Equally, the term “digital” was replaced with “non deposit taking” to address confusion by industry players and the public on the scope of the DCP framework,” said CBK.
In a bid to combat money laundering, investors in NDTCP will also have to reveal to CBK information on the source of their capital.
Kenyans now have until September 5, 2025 to submit their their comments on the regulations before being forwarded to the Cabinet for consideration.
