American multinational technology behemoth; Google has moved to ban all unauthorized mobile loan applications in its mobile application marketplace; Play Store, that have operations in Kenya and are available to users of Android devices.
Starting from Tuesday the 31st of January 2023 all instant mobile loan applications for Android devices will by required by Google to provide their licenses from the Central Bank of Kenya (CBK). Failure to provide said licenses, will result in said applications getting removed from the Google Play Store.
The move is in a bid to comply with the Central Bank Amendment Act of 2021.
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In relation to the Central Bank Amendment Act of 2021 all Digital Credit Providers (DCPs) operating in Kenya were given until Sunday the 17th of September 2022 to carry out applications for new licenses from the Central Bank of Kenya (CBK) or stand the risk of having to close down all their operations in the country.
A new update provided by the Central Bank of Kenya (CBK) revealed that only ten (10) of the total of 288 mobile loan apps that applied for licenses, have been given permission to operate in Kenya.
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According to the technology giant; Google all mobile digital lenders or Digital Credit Providers (DCPs) in Kenya who are looking to get hosted or listed on the Google Play Store must first:
- Complete the registration process for Digital Credit Providers (DCPs).
- Obtain the relevant license from the Central Bank of Kenya (CBK).
- Next, the Digital Credit Provider (DCP) will have to present a copy of said license from the Central Bank of Kenya (CBK).
Google stated that any platform that is not partaking in money lending operations directly and is solely providing an environment that facilitates money lending by Digital Credit Providers (DCPs) that are duly registered to its users, will have to correctly make this known through a declaration and also present a copy of the Digital Credit Provider (DCP) license given by the Central Bank of Kenya (CBK) to said platform’s Digital Credit Provider (DCP) partner(s).
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The company added that it will only accept licenses and declarations from businesses and establishments that have been published or listed under the Directory of Digital Credit Providers on the Central Bank of Kenya (CBK)’s official website.
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Google which currently focuses on search engine technology, cloud computing, quantum computing, online advertising, artificial intelligence, computer software, consumer electronics, and e-commerce revealed that apart from Kenya the new requirements are part of the requirements for all mobile personal loan apps that operate in the Philippines, India, Nigeria, and Indonesia. All of said countries including Kenya, have implemented laws to regulate their respective mobile digital lending sectors.
The decision by Google is coming at a time when various concerns and complaints by consumers have resulted in the Central Bank of Kenya (CBK) implementing a number of guidelines that must be strictly adhered to by the digital lending establishments in Kenya.
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Among the number of guidelines are pricing model and parameters, full disclosure of all hidden costs, a Tax compliance certificate, no utilizing of unethical debt collection methods, a Credit Reference Bureau (CRB) report for every Senior Officer, Director and Shareholder, the source of funds for all owners of the company, as well as a certificate of good conduct.
In the past, unregulated and unauthorized instant mobile loan providers sought to target users who were from low income demographics, in constant need of fast accessible loans and with little to no understanding of how the loan process works.
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Although a number of these unauthorized and unregulated instant mobile loan providers only offered smaller loans of between 500 Kenyan Shillings and 50,000 Kenyan Shillings, some went as far as placing interest rates of over 100 percent per year and late fee charges that were just as high.
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In addition said mobile loan applications had access to their users’ entire contact lists. With this whenever the users were unable to pay back the sums owed, the loan apps would in addition to the extraordinarily high interest fees and late payment penalties, contact the friends and families of the defaulters while also badgering the defaulters with messages that were offensive.
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