Banks, fintechs, and mobile money providers will now assess borrowers’ repayment capacity before approving loans, as Kenya tightens lending rules.
The new rules contained in the 2026 Financial Consumer Protection Framework draft backed by the Central Bank of Kenya, the Capital Markets Authority (CMA) and the Communications Authority of Kenya (CA), will bar Financial service providers (FSPs) from issuing new credit products or increasing existing loan limits unless they first carry out a reasonable assessment of a borrower’s ability to repay without financial hardship.
“An FSP shall not provide a credit product, or an increase in an existing loan or credit limit, to a retail consumer unless they have first undertaken a reasonable assessment to confirm the retail consumer’s ability to repay the credit without financial hardship,” the framework reads in part.
Lenders To Vet Borrowers’ Repayment Ability Before Issuing Loans
At the same time, the providers will be required to ensure that they only offer financial products and services to retail consumers where there is a reasonable likelihood that the products meet the customer’s needs, objectives, and financial capacity.
Lenders will be required to obtain reliable information on a borrower’s financial position, including income, expenses, assets, debts, and other financial commitments.
They will also need to understand the borrower’s purpose for credit before approving any loan or increasing credit limits, in a move aimed at strengthening responsible lending practices.
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Under the proposed framework, FSPs will be expected to take reasonable steps to understand a consumer’s financial situation, including their objectives, needs, and ability to repay or sustain the product.
Lenders will also be required to make formal inquiries into a customer’s financial goals and capacity, and assess whether the product being offered is suitable before approval.
Regulators will have the mandate to determine which financial products and services these requirements will apply to, and when they will take effect.
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Providers To Ease Borrower Burden Under New Repayment Protection Rules
Meanwhile, FSPs will be allowed to charge interest or default-related fees—such as late payment penalties—only on the specific amount in default, for as long as the default continues.
Under new borrower protection measures, lenders will also be required to act promptly when a retail consumer shows signs of repayment difficulties.
In such cases, FSPs must, where possible, offer reasonable assistance aimed at preventing the borrower’s financial situation from worsening before initiating enforcement action.
The proposed support measures include extending the loan term, changing the type of credit agreement, deferring installment payments in part or in full for a specified period, reducing the annual percentage rate, or granting a repayment holiday.
Other interventions available to lenders include allowing partial repayments, offering partial debt forgiveness, or facilitating debt consolidation to ease the borrower’s repayment burden.
