Commentary on the Central Bank of Kenya (Amendment) Bill, 2021


Commentary on the Central Bank of Kenya (Amendment) Bill, 2021


The Kenyan National Assembly is currently in the process of reviewing the Central Bank of Kenya (Amendment) Bill, 2021 (the Bill). The Bill, published on 6th April 2021 as National Assembly Bill Number 10 of 2021 is currently on its second reading on the floor of the assembly. It aims to regulate the activities of digital lenders and protect the rights of customers of digital lending products.

Currently, there is no regulatory structure in place to regulate digital lending platforms. A fair and non-discriminatory loan market is therefore a key mandate of the Kenyan Central Bank (CBK). This notice provides a brief commentary into the Bill’s provisions.

Contents of the Bill

  1. Definitions

Under the Bill, there are a number of new definitions inserted into Section 2 of the Central Bank Act (hereinafter referred to as the principal Act) including;

“digital channel” which under the Bill ought to include, the internet, mobile devices, computer equipment and any software/systems provided by Central Bank of Kenya (the “Bank”);

“digital credit” which denotes a digital credit facility or arrangement where money is lent or borrowed through digital channels;

“digital credit business” is the business of providing digital credit facilities or lending services;

“digital credit provider” signifies a person authorized by The Bank to engage in digital credit business;

“specified digital credit provider” is a licensed digital credit provider in the context of section 33R as proposed by the Bill.

  1. Licensing and Supervision

Subsection (1) of Section 4A of the primary Act is proposed to be amended by introducing a new objective of the Bank immediately after paragraph (d). The Bank will be obligated to license and oversee digital credit companies not regulated under any other written legislation.

Supervision: The Bill generally seeks to grant the Central Bank of Kenya (CBK) the authority to license, supervise, suspend or revoke a license, as well as authorize digital channels and business models for digital credit lending firms. In addition, the CBK will have the authority to impose minimum liquidity and capital adequacy criteria for digital credit providers.

Licensing: A person may not operate a digital credit company unless they have been granted a license by the Bank, under the Act; or the person is allowed to do so by another written law/regulation. An application for a license under the Bill must be made to The Bank in the relevant format and accompanied by the prescribed information and fee. A person who violates these provisions commits an offense and is punishable by imprisonment for a term not exceeding three years or a fine not exceeding five million shillings (Kshs. 5,000,000.00), or both.

  1. Regulation

If necessary or expedient, the Bank may issue Regulations to carry out the provisions of the Act, including but not limited to; 

  • the registration & management requirements for digital credit businesses; 
  • permissible and prohibited activities; 
  • anti-money laundering and counter-terrorism financing measures; 
  • credit information sharing; 
  • data protection; consumer protection; 
  • reporting requirements for digital credit providers; 
  • offences and penalties; and
  • other measures necessary for digital lending regulation.

If the Bill is enacted, all current and active digital credit providers must register with the CBK within six (6) months of the Act taking effect. Furthermore, any rules and regulations must be issued within three (3) months after the Act’s enactment.


As of today, some digital lenders self-regulate under the Kenya Digital Lenders Association (DLAK). The 2021 Bill is the most current attempt by Parliament to regulate digital credit service companies in the country. In their current form, the 2020 Bills would have seemingly required a bank or microfinance institution that is already licensed by the CBK to get a second license in order to sell loan products via a mobile application. 

As currently drafted, the proposal would only affect credit service providers who were not subject to any other form of legislation. This for instance would preclude services such as KCB MPESA, a product of KCB Bank which is a licensed Bank under the CBK act, from the purview of the Bill. Given that the three bills’ aims are substantially similar; legislators should consider merging the 2021 Bill with the other legislation submitted to Parliament last year.

Joy Murugi Omulele and Omondi Partick Oketch