There has recently been a proliferation of instant mobile loans in Kenya. Some of the apps, serve a legitimate purpose of turning profit by offering instant loans to those experiencing a cash crunch.
However, there is a section of the mobile phone lenders who use unscrupulous and quite honestly disgusting methods to recover non-performing loans.
Well, their days are numbered as the Competition Authority of Kenya (CAK) has launched an investigation that will likely obliterate their predatory business models.
The investigation targets both the regulated and unregulated money lenders in Kenya to resolve the high interest rates and unethical means through which the lenders use to corner defaulters of the loans.
Reports of illegal use of borrower’s information by third parties to send threatening messages to relatives and application of force to recover loans have also been made.
The money lenders have also been accused of preparing deceptive documents which do not clearly state the terms of the loan contract, exposing the borrowers to a confusion leading to massive defaults and listings with the Credit Reference Bureaus (CRBS).
The investigation as stated by the director-General of CAK, Wang’ombe Kariuki, will expose the loopholes in the loan contracts, make a provision to reverse the terms and conditions in cases of prejudiced agreements and severe penalties where necessary.
The cap on commercial lending rates, introduced in 2016, encouraged commercial banks to ignore millions of low and medium income earners due to high risk associated with lending, creating a market for unregulated mobile digital money lenders to explore.
Parliament lifted the interest cap law late in 2019.
Source : Business Daily
Kevin is a tech enthusiast and the lead writer at MobiTrends.co.ke. He has been writing about smartphones and tech related topics since October 2012. About Us | Contact Us
