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M-Pesa Bank? MPs seek CBK regulation

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M-Pesa Bank? MPs seek CBK regulation

Central Bank of Kenya
Central Bank of Kenya. FILE PHOTO | NMG 

Members of Parliament are pushing for the delinking of mobile money services from telecommunication firms and their registration as separate commercial banks in a move that could alter the competition landscape for digital cash providers.

If MPs have their way, the telecommunications regulator, the Communications Authority of Kenya (CA), will be compelled to ensure that mobile money services like Safaricom’s M-Pesa, Airtel Money and Telkom’s T-Kash are licensed as banks.

The telecommunication firms will then be licensed to only offer voice, data and SMS services.

Senate Deputy Speaker Kithure Kindiki has tasked the committees on ICT and that of Finance and Budget to jointly scrutinise a statement filed by Narok Senator Ladema ole Kina, asking the committees to inquire and report on various aspects of financial services being offered by the telecommunication firms.

It is not the first time that Parliament is seeking to have mobile money services brought under full regulation of the Central Bank of Kenya (CBK).

Banks have been quietly pushing for tighter regulation of the mobile money space, arguing that lighter rules had enabled the telcos to offer services at a much cheaper rate and higher speed than they can.

The telecommunication firms have, however, argued that tighter regulation will stifle innovation, roll back the gains made in deepening financial inclusivity as well deny customers the efficiency associated with mobile money.

The National Assembly’s Information, Communications and Technology (ICT) committee chaired by Marakwet West MP William Kisang early this month directed the CBK to publish regulations that will see interest rates charged by more than 500 unregulated digital micro-lenders controlled by the banking sector watchdog.

The team asked the banking regulator to ensure the digital lenders are guided by the control on cost of loans introduced in 2016 within six months of adoption of the report.

Mobile money firms and microlenders are currently allowed to skirt a legal cap on cost of loans at four percentage points above the central bank’s benchmark rate.

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“The interest rates should be those applicable to commercial banks for standardisation,” the committee said in a report tabled in Parliament.

The proliferation of lenders using mobile money technology to extend credit to the banked and unbanked alike has saddled borrowers with high interest rates.

Their entry was in response to a rise in demand for quick loans and the freeze in commercial bank lending to individuals and small business, which followed the capping of interest rates in 2016.

The lenders, who are charging borrowers annualised interest of between 18 percent and 200 percent, have tapped into a market that has become more lucrative than mainstream banking where lending rates are capped by law at 13 percent. The list of seasoned players in this market includes Letshengo, Tala, Izwe and Branch, while new market entrants include digital lending platforms such as Nairobi Securities Exchange-listed firm Car & General.

Mr ole Kina also wants the Senate ICT committee to issue a report on the protection of consumer data by telecommunication companies.

“The committee should explain the regulatory framework for financial transactions including loans and promotions transacted through mobile telecommunication companies,” he said.

He also wants to know whether the interest charged on loans and other credit facilities advanced to customers by or through mobile companies adhere to the law on interest capping.

The Senate’s ICT and Budget committees will inquire into safeguards to ensure lending services by telecommunication companies do not bring down the economy in case companies collapse or shut down.

“The committee should state whether financial services being offered by the telecommunications companies can be delinked from those companies and registered as financial companies,” Mr ole Kina said.

He also wants to know whether measures have been put in place to ensure consumer data obtained by the mobile telecommunication companies and other companies using the mobile platform for financial promotions don’t fall in the hands of criminal entities or being used for identity theft.

“The committee should explain whether mobile telecommunication companies can set up a mechanism to alert mobile phone users when their national ID numbers are used to register a new phone number,” the Narok lawmaker said.

He is also seeking to know if mobile telecommunication companies and third parties such as banks have a safe data-sharing platform between each other for protecting the consumers, such as reversal of erroneous financial transactions.

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World Bank pushes G-20 to extend debt relief to 2021

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World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.

“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.

He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.

The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.

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People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.

For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.

Debt burdens, already unsustainable for many countries, are rising to crisis levels.

“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.

ALSO READ:Global Economy Plunges into Worst Recession – World Bank

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Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans

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The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.

“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”

According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.

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Tighter Reins on Platforms for Mobile Loans

The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.

Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.

Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.

SEE ALSO: Central Bank Unveils Measures to Tame Unregulated Digital Lenders

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Scope Markets Kenya customers to have instant access to global financial markets

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NAIROBI, Kenya, Jul 20 – Clients trading through the Scope Markets Kenya trading platform will get instant access to global financial markets and wider investment options. 

This follows the launch of a new Scope Markets app, available on both the Google PlayStore and IOS Apple Store.

The Scope Markets app offers clients over 500 investment opportunities across global financial markets.

The Scope Markets app has a brand new user interface that is very user friendly, following feedback from customers.

The application offers real-time quotes; newsfeeds; research facilities, and a chat feature which enables a customer to make direct contact with the Customer Service Team during trading days (Monday to Friday).

The platform also offers an enhanced client interface including catering for those who trade at night.

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The client will get instant access to several asset classes in the global financial markets including; Single Stocks CFDs (US, UK, EU) such as Facebook, Amazon, Apple, Netflix and Google, BP, Carrefour;  Indices (Nasdaq, FTSE UK), Metals (Gold, Silver); Currencies (60+ Pairs), Commodities (Oil, Natural Gas).

The launch is part of Scope Markets Kenya strategy of enriching the customer experience while offering clients access to global trading opportunities.

Scope Markets Kenya CEO, Kevin Ng’ang’a observed, “the Sope Markets app is very easy to use especially when executing trades. Customers are at the heart of everything we do. We designed the Scope Markets app with the customer experience in mind as we seek to respond to feedback from our customers.”

He added that enhancing the client experience builds upon the robust trading platform, Meta Trader 5, unveiled in 2019, enabling Scope Markets Kenya to broaden the asset classes available on the trading platform.

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