By Sarah Mukeku
The Central Bank of Kenya (CBK) has proposed significant changes to the regulation of non-deposit-taking credit providers through the Draft Central Bank of Kenya (Non-Deposit-Taking Credit Providers) Regulations, 2025. The proposed Regulations seek to repeal the Central Bank of Kenya (Digital Credit Providers) Regulations, 2022, introducing a broader regulatory framework that extends beyond digital lenders and reflects the evolving credit market.
From Digital Credit Providers to Non-Deposit-Taking Credit Providers
The 2022 Regulations established a licensing framework specifically for Digital Credit Providers (DCPs), bringing previously unregulated digital lenders under CBK supervision. The primary objectives were to:
- Promote responsible lending
- Protect consumers
- Enhance transparency within Kenya’s rapidly growing digital lending sector
The Draft 2025 Regulations expand this regulatory approach by introducing the concept of Non-Deposit-Taking Credit Providers (NDTCPs). This broader category encompasses institutions that provide credit but do not accept customer deposits, creating a more comprehensive regulatory framework for the credit industry.
Significant Increase in Licensing Fees
One of the most notable reforms is the substantial increase in licensing costs.
| Fee Type | 2022 DCP Regulations (KES) | Draft 2025 NDTCP Regulations (KES) |
| Application Fee | KES 5,000 | KES 100,000 |
| Annual Licence Fee | KES 20,000 | KES 500,000 |
Under the 2022 Regulations, an applicant was required to pay an application fee of KES 5,000 and an annual licence fee of KES 20,000. The Draft 2025 Regulations propose increasing the application fee to KES 100,000 and the annual licence fee to KES 500,000, payable upon the grant of a licence and annually thereafter.
Introduction of a Registration Framework
The Draft Regulations also introduce an alternative regulatory pathway for smaller institutions.
- Threshold: Entities with initial capital below KES 20 million may apply for registration instead of a full licence.
- Annual Registration Fee: Registered entities must pay an annual registration fee of KES 250,000, half of the proposed annual licence fee.
This distinction appears to be intended to promote proportionate regulation by recognising differences in the scale and financial capacity of credit providers while maintaining appropriate regulatory oversight.
Enhanced Compliance and Enforcement
Beyond licensing fees, the Draft Regulations strengthen the CBK’s enforcement powers.
Institutions that fail to comply with the regulatory framework may face a range of administrative sanctions, including:
- Monetary penalties
- Increased regulatory inspections
- Suspension of registration or licence
- Revocation of registration or licence in appropriate circumstances
These measures demonstrate CBK’s continued focus on ensuring compliance, promoting market integrity, and protecting consumers.
Practical Implications for Credit Providers
If implemented, the proposed Regulations are likely to have significant commercial and operational implications across the industry:
- For Existing Credit Providers: The increased annual fees will result in higher compliance costs that should be factored into financial planning and budgeting.
- For New Entrants: The higher application fee may increase the cost of entering the market, requiring businesses to allocate greater capital towards regulatory compliance from the outset.
- For Smaller Institutions: The introduction of a registration framework may provide a more accessible regulatory pathway for smaller institutions that do not meet the capital threshold for full licensing.
Ultimately, businesses will need to assess their capital structure, operational model, and long-term growth strategy to determine the most appropriate regulatory category under the proposed framework.
Conclusion
The Draft Central Bank of Kenya (Non-Deposit-Taking Credit Providers) Regulations, 2025 reflect the CBK’s continued efforts to strengthen oversight of Kenya’s credit sector while promoting greater accountability and consumer protection. As the proposed framework introduces new licensing requirements, higher compliance costs, and enhanced regulatory obligations, businesses should take proactive steps to understand and prepare for the changes.
As these reforms continue to take shape, MasiboLaw LLP remains committed to helping businesses navigate the evolving regulatory landscape by providing practical legal advice on licensing, regulatory compliance, and risk management.
In case you need any assistance you can reach us on info@masibolaw.co.ke
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