Kenyans applying for loans may soon face tighter scrutiny before receiving credit, as regulators move to require lenders to carry out affordability checks before any borrowing is approved.
The new rules are contained in a March 2026 Financial Consumer Protection Framework draft backed by the Central Bank of Kenya, the Capital Markets Authority, and the Communications Authority of Kenya, and would apply across banks, fintechs, and mobile money providers. The Consumer Protection Framework Technical Working Group, which comprises representatives from seven regulatory bodies including the CBK and the Capital Markets Authority, developed the draft with support from the National Treasury.
The CBK released a public notice on April 14, 2026, outlining the proposed changes and opening the public participation process, with a submission deadline of April 28, 2026.
The shift marks a significant departure from how credit has typically been extended in Kenya. Digital lenders have traditionally approved loans using alternative data such as mobile money transactions, airtime usage, and device metadata, with decisions made in seconds and little verification of income or expenses. Lenders have also increased borrowing limits based on a customer’s repayment history, without fully assessing their ability to take on additional debt.
Under the proposed framework, that approach would no longer be sufficient. Lenders would be required to check income, expenses, and existing debt, and document whether a borrower can afford a loan before issuing it, applying the same requirement across banks, fintechs, and mobile money providers.
The rules come against a backdrop of a rapidly growing but unevenly regulated credit market. As of February 2026, licensed lenders had disbursed 7.5 million loans worth KES 133.5 billion, reflecting the scale of mobile based credit uptake. Yet default rates tell a more troubling story. Data from the Central Bank shows that loans below KES 1,000 recorded default rates of more than 80 percent, while loans between KES 1,000 and KES 5,000 recorded default rates of about 69 percent. Overall default rates for digital lenders have been reported as high as 40 percent, more than double those in the banking sector.
Regulators framed the framework around six core principles. According to the CBK, it is anchored on fair treatment, transparency, product suitability, asset protection, accessible complaints handling, and data privacy.
The draft framework seeks to limit the build up of unsustainable debt rather than manage defaults after the fact, by requiring affordability checks at origination. It also links loan origination to lenders’ handling of repayment difficulties, with firms expected to engage borrowers who show signs of distress and consider options such as restructuring or deferred payments before taking enforcement action.
The framework remains open for public comment until April 28, 2026. If adopted, it would place the burden of responsible lending on lenders, requiring them to justify not just whether a loan was issued, but the reasoning behind it.
