The Treasury has moved to tighten regulations on digital lending platforms, imposing stiffer fines and threatening license revocations for lenders that exploit Kenyans with high interest rates or aggressive recovery tactics.
Treasury Cabinet Secretary John Mbadi disclosed the measures on Wednesday, February 25, 2026, during a Senate session, noting that fines for violating the Banking Act have quadrupled from Sh500,000 to Sh2 million.
Mbadi’s remarks came after Senators pressed the government to protect consumers from lenders who not only impose excessive interest rates but also compromise data privacy and use harsh methods to recover debts.
“We have enhanced the penalty for violations and failure to comply with the provisions of the Banking Act and any other regulations and guidelines, from Sh500,000 to Sh2 million to be dissuasive and instil discipline among non-deposit-taking credit providers,” Mbadi stated.
While the increased fines target exploitative digital lenders, Mbadi emphasized that issues regarding customer data protection fall under the Office of the Data Protection Commissioner.
Senator Moses Kajwang challenged Mbadi on what actions were being taken against lenders whose interest charges more than double the principal amount.
“The credit lenders need to have their pricing module approved to ensure they follow the duplum rule in accordance with Section 44 of the Banking Act,” Mbadi replied.
The CS also highlighted that both the Ministry and the Central Bank of Kenya will take action against microfinance institutions offering logbook loans at excessively high interest rates.
“There are people who offer credit facilities and take logbooks with the sole objective of selling these assets because they know that their debt structure undermines the servicing of the loans. Now, they must operate within the law, and if they do not operate within the law, they can even have their licences revoked,” he reiterated.
Despite calls from Senators to set standard lending rates across the banking sector, Mbadi opposed the move, warning that it could harm the economy.
“If we control interest rates, you discourage investment in your country, and you are making your country uncompetitive, and the credit rating of your country will go down,” he said, adding that banks need the flexibility to set rates without restrictions.
The new measures aim to protect consumers from predatory lending practices while ensuring that financial institutions continue to operate within a regulated framework.
