This means that it only loans apps that have licenses from the country’s central bank and will then be listed on the company app store, Google Play Store, and Google’s digital distribution service.
However, the loan apps which have not been provided a license by the Central Bank of Kenya and can provide proof that the license can be gotten, can also approach the technology company and get approval which will only last 45 days but when this internment approval elapses the unlicensed providers will require to submit another declaration form attesting that CBK approval is still pending.
A Google spokesperson disclosed to TechCrunch that if the application for the license is rejected during the 45 days, the interim approval will be withdrawn.
This is Google’s move to regulate the number of unregulated loan apps in Kenya, and with similar moves being made in India, Indonesia and the Philippines and loan providers are requested to provide permits from authorities and also help them regulate the financial services sector to be listed on Play Store.
In Nigeria, Google also requires the loan apps to provide “verifiable approved letters” from the Federal Competition and Consumer Protection Commission, which also set new regulations that require loan apps to declare their fees and also show how they receive feedback and resolve complaints, including other requirements.
22 digital lenders have been registered so far and are licensed to operate in Kenya which includes Tala, a loan app, backed by PayPal, Pezesha, a B2B embedded lending platform, Jumo, a fintech providing financial services including lending have all been licensed so far out of 381 applicants for the CBK’s license.
Nigeria and Kenya, which are known as major tech hubs and are host to several fintech and loan apps have recently seen the rise of several unsecured and unregulated loan apps which provide personal and business loans to people. This has Google to come up with stringent regulations to keep citizens protected.
In Kenya also, Google’s new policy is expected to follow the same pattern regarding regulations, which enforces strict regulations that prevent digital lenders to avoid the use of threats or debt-shaming tactics, including the posting of personal information on online forums, unauthorized calls, and messages to customers and access to their contact lists for purpose of coercion in case of default.
This has been common among loan apps recently, where they collect borrowers’ phone data including contacts, and request access to messages to check the history of mobile money transactions which is used for credit scoring and as conditions for disbursing loans. Scrupulous lender apps have been known to share contact information with third-party debt collectors without prior consent.
Regarding Kenyan law, loan apps are also required to disclose their pricing model, as well as the terms and charges to customers in advance. They are also expected to notify the regulators when new features and products are being introduced. The new regulations also require digital lenders to provide proof of the source of funds and how they raise capital to avoid financial crimes like money laundering.
