Kenya's MPs Order CBK to Pause Rollout of Tougher Rules for Digital Lenders

Parliament’s Committee on Delegated Legislation has directed the Central Bank of Kenya (CBK) to suspend the rollout of new rules for non-deposit-taking credit providers, pending a review of provisions that MPs say give the regulator too much discretion and set penalties the law does not allow. Kenyan outlets reported the directive on 13 November, after the committee met on 12 November.

The rules reach well beyond app-based lenders. The Central Bank of Kenya (Non-Deposit Taking Credit Providers) Regulations, 2026, published as Legal Notice No. 191 on 29 September, cover digital and conventional loans, buy-now-pay-later schemes, asset financing, stock-now-pay-later and pay-as-you-go credit, and some peer-to-peer and guarantee business. Banks, microfinance banks, SACCOs and other lenders regulated under separate laws are generally outside the framework. The regulations replace the 2022 digital credit providers rules.

Kenya Law’s text gives 29 September as the date of publication and commencement. A law firm’s alert of 28 October described the regulations as in force. Streamline Newsroom reported that the regulations remain gazetted law and that the committee’s directive suspends their rollout.

What lenders would need to do

Providers with initial capital of KSh20 million or more would need a CBK licence; smaller providers would register. Existing providers within the expanded framework have until 29 March 2027 to apply, and they may keep operating while CBK considers their applications.

Other requirements reported in the regulations and in analysis of them include:

Lenders that use AI in credit decisions must explain automated decisions, tell customers when they are dealing with AI, keep human oversight and assess bias.
Disbursing loans in foreign currencies would be prohibited. Non-deposit takers must be incorporated in Kenya and keep at least one registered physical office there, so foreign lenders would need a locally incorporated company.
Repayments must be applied first to principal, then to fees and charges, and finally to interest.

Where MPs pushed back

MPs objected to clauses that let CBK demand “any other document” or prescribe other functions without defined limits. They also challenged the penalty in Regulation 86: an administrative fine of up to KSh2 million, or three times the gain made or loss avoided if that is higher, plus up to KSh10,000 for each day a violation continues. Senior officers can face personal penalties of up to KSh250,000.

Committee chair Samuel Chepkonga argued that the penalty exceeds the maximum set by the Statutory Instruments Act and said that “it makes these regulations themselves void.” Pulse Kenya notes that section 57(4) of the amended CBK Act separately gives the regulator power to prescribe penalties on a similar formula, so the penalty question is contested rather than settled. The committee also criticised the drafting as unnecessarily complicated.

The market behind the rules

CBK officials told the committee that the regulator had received more than 900 licence applications since the digital credit framework began in 2022, and that 281 providers had been licensed by September 2026, with loans valued at about KSh165.1 billion, according to The Kenya Times.

M-KOPA, which StartupList lists as a Nairobi fintech founded in 2011, has defended its digital-loan pricing, saying monthly interest runs from 3% to 15% depending on eligibility and the offer. Streamline Newsroom reported that defence alongside the committee action. The company’s blog post carries a 24 September 2026 date in its publication metadata, so it predates the committee sitting and is not a direct reply to the directive.

What remains unconfirmed

We did not retrieve the committee’s report or the official record of the sitting, and the Kenya News Agency page on the directive timed out. The directive therefore rests on press reports that quote the committee. We found no public CBK response to it. No formal annulment of Legal Notice 191 had been reported by 13 November. The committee’s action is not a court ruling and does not cancel the framework.

The open questions are whether CBK redrafts the disputed clauses, whether the rollout resumes, and whether the 29 March 2027 application window changes.