Entities operating digital lending businesses without a Central Bank of Kenya (CBK) license will no longer have access to legal redress, following a ruling by the Milimani Small Claims Court in Nairobi.
Court Ruling on Digital Lending Compliance
Magistrate Kiongo Kagenyo made the decision after Aventus Technology Limited, a digital lender, attempted to pursue a case despite failing to meet CBK licensing regulations.
The court found the firm non-compliant with Section 33S of the CBK Act, which prohibits unlicensed entities from offering digital credit services in Kenya.
Legal Standing Challenged
Donald Nyaga, representing Aventus Technology Limited, struggled to justify the firm’s legal standing.
“In his response, Nyaga informed the Court that the company is in the pipeline of compliance,” the magistrate stated.
However, the court ruled against the lender, asserting:
“As it stands, Aventus Technology Limited is operating in non-conformity with the dictates of the regulating authority, and the court cannot dignify an illegality by presiding over such matters.”
Cases Dismissed
All cases filed by Aventus Technology Limited were dismissed, with the court declaring:
“For the foregoing, all the matters filed by Aventus Technology Limited as appearing in today’s cause list are hereby dismissed, for the Claimant is operating contrary to the law.”
Scrutiny of Other Digital Lenders
The ruling also placed other digital lenders under scrutiny, including:
- Kalita System Debt Holding Kenya Limited
- Garnet Portfolio Management Limited
- Sirius Collect Limited
- M-Collect Limited
- Maxlev-Finance Limited
These entities were found to have filed cases and later abandoned them.
“The totality of the foregoing is that the Court is compelled to make a finding that the Claimant is The Judiciary of Kenya abusing the Court process, making it a candidate of being declared a vexatious litigant pursuant to Section 2 (1) of the Vexatious Proceedings Act, and consequently dismiss the suit in limine, at this stage, which it hereby does.”
Impact on Kenya’s Digital Lending Sector
This ruling reinforces CBK’s regulatory authority, effectively shutting the door on legal claims by unlicensed digital lenders until they comply with licensing requirements. The decision is expected to strengthen consumer protection and accountability in Kenya’s digital credit industry.
