The Central Bank of Kenya (CBK) is intensifying its crackdown on hidden charges in the pricing of loans with a landmark proposal that will, for the first time, compel mobile lenders to transparently outline all borrowing costs or face penalties.
This came as local lenders moved to court to lock out the National Treasury from having a say in how they price their loans. A newly released consultative paper details plans to overhaul the existing risk-based lending model and subject the rapidly expanding mobile loan sector to stringent new disclosure requirements.
The regulator's review of the Risk-Based Credit Pricing Model (RBCPM), introduced in 2019, revealed widespread inconsistencies and the imposition of opaque "other charges" by commercial banks, obscuring the true cost of credit.
On-site inspections indicated a divergence from the model's intended application, with lenders often applying discounts to initial inflated rates.
