On Wednesday, November 13, the National Assembly received a new bill—Business Law (Amendment) Bill 2024—that aims to bring about a comprehensive change in the money lending industry by expanding the scope of penalties to include the lending area.
The Business Law (Amendment) Bill 2024 would specifically target players in the financial sectors, meaning that it will include consumers, institutions, and credit reference bureaus as its target audience.
This initiative focuses on financial institutions, credit reference bureaus (CRBs), and any other individuals who fail to comply with the financial standards published by the Central Bank of Kenya (CBK).
The bill carries severe penalties of up to one million Kenyan Shillings in the event that Kenyans disobey the restrictions.
“The penalties under subsection (2) shall not exceed twenty million shillings for an institution or credit reference bureau, or three times the gross amount of the monetary gain or loss avoided by the failure or refusal to comply, whichever is higher,” the bill says.
“The penalties for a corporate entity shall not exceed three million shillings and the penalties for a natural person shall not exceed one million shillings. The penalties shall not exceed twenty million shillings.”
Following the approval of the law by the National Assembly, the Central Bank of Kenya (CBK) would levy a fine of twenty million Kenyan shillings on CRBs and financial institutions who disobey its directions.
This is of the utmost significance, as the CBK has been accusing some institutions of violating data protection regulations by revealing private information about their clients.
As an alternative, the Central Bank of Kenya (CBK) would impose a punishment on the institutions that is three times the amount of money they would have gained if they had adhered to its orders about the legislation governing the financial industry.
Companies found to have disregarded the amendment’s requirements could face a fine of three million Kenyan shillings.
The new recommendations would attempt to amend Section 55(2) of the Banking Administration Act in accordance with the papers provided to the National Assembly.
“The Bill aims to change Section 55(2) of the Banking Act to include penalties for institutions, credit reference bureaus, or anyone else who does not follow any part of the Act, the Prudential Guidelines, or directions from the Central Bank of Kenya and the Act or the Prudential Guidelines,” the documents state. This is one component of the proposed legislation.
Individuals who broke such agreements were originally subject to fines of Ksh10,000, while institutions and CRBs were subject to penalties of up to Ksh1 million.
In order to carry out the requirements and purposes of this Act, the Minister has the authority to adopt general rules.
The preceding paragraph states that the Minister has the authority to establish penalties in regulations for institutions or credit reference bureaus that fail or refuse to comply with the Central Bank’s orders under this Act.
“This provision does not impact the generality of subsection (1). For a natural person, the maximum amount of these fines shall not exceed one hundred thousand shillings, while for an institution or credit reference agency, the maximum amount should not exceed one million shillings.
“Additionally, the Minister has the authority to impose additional fines, not exceeding ten thousand shillings, for each day or portion of a day in which such failure or refusal persists.”
