If you're planning to start a non-deposit-taking credit business in Kenya, you need to understand the regulatory requirements before getting started. Unlike an ordinary business, a non-deposit-taking credit provider must be registered or licensed by the Central Bank of Kenya (CBK) before it can operate. The requirements depend on the initial capital of the business. Here is what you need to know about registering or licensing a non-deposit-taking credit provider in Kenya.
What Is a Non-Deposit-Taking Credit Provider?
A non-deposit-taking credit provider is a business that provides credit without taking deposits. The CBK regulates non-deposit-taking credit businesses that are not regulated under another written law.
The regulations do not apply to institutions already regulated under laws such as the Banking Act, Microfinance Act or Sacco Societies Act.
Requirements for Registration
If your proposed business has initial capital of less than KSh 20 million, you can apply to the CBK for registration as a non-deposit-taking credit provider.
Before applying, you need to prepare documents and information including:
- A certificate of incorporation and the company's Memorandum and Articles of Association
- Notification of the company's physical address
- A valid certificate under the Data Protection Act
- A statement on compliance with the Consumer Protection Act
- Evidence of the availability and amount of capital
- Information on the source of capital
- Details of the credit products and services you intend to provide
- Your AML/CFT, data protection, corporate governance and consumer protection policies
- Your credit policy and procedures and code of conduct
- Your pricing parameters
- Fit and proper forms for relevant directors, senior officers and significant shareholders
- Certificates of good conduct, tax compliance certificates and CRB reports for the relevant individuals
You will also need to pay the applicable non-refundable application fee.
Steps to Register a Non-Deposit-Taking Credit Provider
Step 1: Establish the Company
Before applying for registration, you need to have a company registered under the Companies Act. Your company should have the appropriate credit business as its proposed activity.
Make sure your incorporation documents and company information are in order before starting the CBK application.
Step 2: Prepare the Required Documents
Next, gather the documents and information required by the CBK.
This includes information about your capital, source of funds, credit products, policies, management and shareholders. Make sure the information you provide is complete and accurate before submitting your application.
Step 3: Submit the Application to CBK
You can then submit your registration application to the Central Bank of Kenya using the prescribed application form together with the required supporting documents.
The CBK will review your application and may require additional information where necessary.
Step 4: Pay the Applicable Fees
The application fee for registration or licensing is KSh 100,000.
For a registered non-deposit-taking credit provider, the annual fee is KSh 250,000. If the business is licensed, the annual fee is KSh 500,000.
Step 5: Receive Your Certificate of Registration
If the CBK is satisfied that you have submitted the required documentation, it may issue a Certificate of Registration, with or without conditions.
The certificate remains valid unless it is suspended or revoked.
When Do You Need a License?
If your initial capital is more than KSh 20 million, you need to apply to the CBK for a license instead of registration.
A registered provider must also apply for a license if, during its operations, its capital, borrowings or loan book exceeds KSh 20 million.
How Long Does Licensing Take?
For a complete license application, the CBK may grant the license within 60 days of submission.
The actual process may take longer where the application is incomplete or the CBK requests additional information.
What Happens After Registration or Licensing?
Getting your registration or license is not the end of your regulatory obligations. You will need to continue complying with the requirements that apply to non-deposit-taking credit providers.
This includes maintaining appropriate corporate governance, credit, consumer protection, data protection and AML/CFT policies and procedures.
You must also have at least one registered physical office in Kenya and comply with the CBK's ongoing regulatory requirements.
Wrapping Up
Starting a non-deposit-taking credit business in Kenya involves more than registering a company.
Depending on your initial capital and the size of your business, you may need to register with or obtain a license from the Central Bank of Kenya.
Preparing your documents, understanding the applicable requirements and ensuring that your business meets the CBK's regulatory requirements can help make the registration or licensing process easier.