Obtaining a Digital Credit Providers License in Kenya

It is worth noting that this Licence has effectively replaced the No Objection Letter for Non-Deposit taking Microfinance. The CBK has a list of all licensed DCP’s on its website.

A digital lending license allows a company to legally operate as a digital lender in Kenya, providing loans to customers through online platforms or mobile apps. In this article, we will guide you through the steps involved in obtaining a digital lending license from the CBK, and provide you with a helpful checklist to keep you on track.

Step 1: Understand the Requirements for Obtaining a Digital Lending License

Before applying for a digital lending license, it is essential to understand the requirements set by the Central Bank of Kenya. The requirements include:

1.1. Legal Status

The applicant must be a registered company in Kenya with a physical presence in the country.

1.2. Capital Requirements

The applicant must show the company’s shareholding structure.

1.3. Corporate Governance

The applicant must demonstrate a clear and transparent corporate governance structure. The board of directors and senior management team should have the necessary experience and expertise to manage a digital lending business.

1.4. Risk Management

The applicant must have robust risk management policies and procedures in place to mitigate the risks associated with digital lending.

1.5. Consumer Protection

The applicant must demonstrate that they have put in place adequate measures to protect the interests of consumers. This includes ensuring that the terms and conditions of the loans are transparent and that the customer data is protected.

1.6. Technology Infrastructure

The applicant must have a robust technology infrastructure to support the digital lending business. This includes having secure and reliable systems for loan origination, credit scoring, and loan disbursement.

Step 2: Prepare Your Application

Once you have understood the requirements, the next step is to prepare your application. The application should include the following:

2.1. Business Plan

The business plan should include the company profile, management team, market analysis, marketing plan, risk management plan, and financial projections.

2.2. Capital Structure

The capital structure should detail the source of the company’s funds, including the shareholding structure and the sources of financing.

2.3. Organizational Structure

The organizational structure should outline the company’s governance structure, including the board of directors, senior management team, and key personnel.

2.4. Risk Management Plan

The risk management plan should outline the risks associated with digital lending and the measures the company will take to mitigate those risks.

2.5. Consumer Protection Plan

The consumer protection plan should outline the measures the company will take to protect the interests of its customers, including ensuring that the terms and conditions of the loans are transparent and that the customer data is protected.

2.6. Technology Infrastructure Plan

The technology infrastructure plan should detail the systems and processes the company will put in place to support the digital lending business.

Step 3: Submit Your Application

Once you have prepared your application, you can submit it to the Central Bank of Kenya. The application should be accompanied by the following documents:

3.1. Certificate of Incorporation

The certificate of incorporation is proof that the company is registered in Kenya.

3.2. Memorandum and Articles of Association

The memorandum and articles of association set out the rules and regulations governing the company.

3.3. Shareholding Structure

The shareholding structure should detail the ownership of the company.

3.4. Business Plan

The business plan should include the company profile, management team, market analysis, marketing plan, risk management plan, and financial projections.

3.5. Capital Structure

The capital structure should detail the source of the company’s funds,

Checklist for obtaining a digital lending license from the CBK:

• Conduct thorough research on the requirements and regulations governing digital lending in Kenya
• Develop a comprehensive business plan that outlines your company’s objectives, target market, revenue streams, and marketing strategies
• Register your company with the Registrar of Companies and obtain a Personal identification number
• Prepare a comprehensive license application that includes your business plan, organizational structure, governance framework, and risk management policies
• Provide detailed financial statements and projections, as well as evidence of your company’s compliance with KYC/AML regulations
• Submit your license application to the CBK for review
• Wait for approval from the CBK

Other services we provide;

Registration of Companies in Kenya

Immigration Services in Kenya

Legal Advisory Services in Kenya

General Corporate Legal Services