Kenyans with more than one mobile loan apps on their smartphones are likely to be denied loans in future.
The newly-formed Digital Lenders Association of Kenya that has brought together 12 digital lenders says Kenyans with multiple loan apps are always the highest defaulters.
Most Kenyans who rely on digital borrowing have more than one mobile loan app to enable them borrow from different lenders. Some borrow from one lender to pay the other.
The proposal by the Association is likely to hit a dead end given that small players in the field are likely to suffer because most of their customers will be locked out.
The Association also proposes a loan limit of 4,000 shillings for first-time borrowers. This proposal is also likely to die prematurely because most lenders rely on the customer’s mobile transaction history to determine the loan limit.
The lowest loan limit from a digital lender in Kenya is currently at 250 shillings with the highest interest charged being at 35 percent.
Kenya has over 500 digital lenders who have been blamed of taking advantage of the desperate unbanked population to exploit them with high interest rates.
For years, the digital lending sector has remained unregulated with individual players allowed to set their own terms and conditions in terms of loan duration and interest rate.
There have been calls on the Central Bank of Kenya to regulate digital lenders and make sure that they are operating within the interest capping law.
The CBK, through Governor Patrick Njoroge, termed digital lenders as enhanced Shylocks who have advanced through digital platforms to exploit people through higher rates.
The majority of Kenyans prefer digital lenders despite the hike in interest rates because their loans are disbursed within minutes and there is no security needed as it is the case with commercial banks.
The CBK is yet to come clear as to whether digital lenders will be regulated.