Regulators tighten grip on predatory lending practices

The draft Financial Consumer Protection Framework outlaws the practice of dispatching auctioneers the moment a borrower misses a single installment. [Courtesy]

Commercial banks, Saccos and digital lenders in the country that have built fortunes on rushed auctions and fire-sale seizures face a sweeping regulatory crackdown including loss of licences, after the Central Bank of Kenya (CBK) and six other watchdogs unveiled rules that force lenders to offer repayment relief to distressed borrowers before touching collateral.

The draft Financial Consumer Protection Framework, backed by the CBK and the Sacco Societies Regulatory Authority (Sasra), effectively outlaws the practice of dispatching auctioneers the moment a borrower misses a single installment, a tactic that has pushed millions of Kenyans, including former top government officials, teachers, doctors, farmers and small traders and manufacturers, from wealth and financial stability into the streets and economic ruin.