Does Your Business Need a CBK Credit Licence? The Exemptions

Kenya’s credit licensing net is now wide enough to catch businesses that do not think of themselves as lenders. Since 29 September 2026, the Central Bank of Kenya (Non-Deposit Taking Credit Providers) Regulations, 2026 (Legal Notice 191 of 2026) require anyone carrying on non-deposit taking credit business to be licensed or registered by the Central Bank of Kenya (CBK). The useful question for most businesses is not what the Regulations cover but what they leave out. This article works through the definition and the exclusions in regulation 3(3).

Start With the Definition

The Central Bank of Kenya Act, as amended by the Business Laws (Amendment) Act, 2024, defines non-deposit taking credit business as:

• granting loans or credit facilities, whether or not digitally, to members of the public or a section of it, with or without interest, secured or unsecured on the goods or assets purchased;
• asset financing, whether directly or through a third-party financier;
• buy now pay later arrangements as determined by CBK, excluding hire purchase agreements governed by the Hire-Purchase Act;
• credit guarantees;
• pay as you go arrangements as CBK may determine;
• peer to peer lending under collective investment schemes regulated under the Capital Markets Act; and
• any other activity CBK determines to be non-deposit taking credit business.

The 2026 Regulations add detail. A “loan” includes buy now pay later, stock now pay later and peer to peer lending offered by the lender. “Pay as you go” means an arrangement where a consumer gets the use of an asset through partial or periodic payments, intending to own it, while the provider keeps the right to restrict, deactivate or repossess the asset on non-payment. A non-deposit taking credit provider is one that lends using its own funds and assets, and the definition excludes the national and county governments.

The Exclusions in Regulation 3(3)

Regulation 3(3) lists the persons and arrangements to which the Regulations do not apply:

1. institutions licensed under the Banking Act;
2. credit guarantee companies or providers regulated under the Central Bank of Kenya Act;
3. institutions licensed under the Microfinance Act;
4. co-operative societies registered under the Co-operative Societies Act;
5. Sacco societies licensed under the Sacco Societies Act;
6. credit that is merely incidental to the sale of goods or provision of services by a person whose primary business is providing those goods or services;
7. lease finance transactions regulated under any written law;
8. hire-purchase arrangements involving the bailment of goods under the Hire Purchase Act;
9. a person whose non-deposit taking credit business is regulated under any other written law; and
10. any other person approved by CBK whose business does not fall within the definition of “financial institution” under the Proceeds of Crime and Anti-Money Laundering Act.

Most of these simply avoid double regulation: banks, microfinance banks, co-operatives and Saccos already answer to a regulator. The exclusions that matter for ordinary businesses are the incidental credit exclusion, the hire purchase and lease finance exclusions, and the CBK approval route.

Incidental Credit: The Exemption Most Businesses Rely On

A supplier that lets customers pay over time is not automatically a lender. Both the Act’s definition and regulation 3(3)(f) exclude credit that is merely incidental to selling goods or services, where the seller’s primary business is those goods or services. A furniture shop that lets a customer pay over three months, a school that accepts fees in instalments, or a contractor that invoices on 60-day terms will usually fall here.

Regulation 3(3)(f) must be read with regulation 18(3), which defines “merely incidental” as a credit arrangement that does not form the core business of an entity but is offered from time to time to customers to enable them to access goods and services offered by a seller, and which does not include hire purchase or leasing business. In practice the test has two limbs, and both must be met:

• Primary business. The person’s main business must be the goods or services. If the credit has become a profit centre in its own right, with interest or fees priced as a lending product, the exclusion is harder to claim.
• Merely incidental. The credit must exist to support the sale, not the other way round, and under regulation 18(3) it is offered from time to time to customers of the seller. Financing offered by a separate group company, or financing for goods the business does not itself sell, is unlikely to be incidental to that business’s own sales.

There is no reported Kenyan decision on how the regulation 18(3) definition applies in practice. Businesses near the line should document why their credit is incidental and keep that analysis under review as the credit book grows. The rule also cuts the other way: regulation 18(2) bars a licensed or registered credit provider from entering into a credit arrangement that is merely incidental to the sale of goods and provision of services.

Hire Purchase, Leasing and Buy Now Pay Later

Hire purchase agreements governed by the Hire-Purchase Act are carved out twice: from the statutory buy now pay later category and by regulation 3(3)(h). The carve-out depends on the agreement actually being a hire purchase agreement under that Act. A product branded as buy now pay later, in which ownership passes at the start and the customer owes a debt, is not a hire purchase agreement and does not benefit.

Lease finance is excluded only where the transaction is “regulated under any written law” (regulation 3(3)(g)). A business offering leases outside any specific regulatory regime should not assume the exclusion applies; asset financing “whether directly or through a third-party financier” is expressly inside the definition.

Pay as you go is expressly in. Our article on pay as you go solar and consumer credit law looks at how that sector is affected.

The CBK Approval Route

Regulation 3(3)(j) excludes any other person approved by CBK whose business does not fall within the definition of “financial institution” under the Proceeds of Crime and Anti-Money Laundering Act. The exclusion depends on CBK’s approval, so a business that believes it should be outside the regime and cannot fit another exclusion has to ask CBK, not assume.

What If You Are In Scope

A business that falls inside the definition and outside every exclusion must be licensed or registered. Initial capital of not less than twenty million shillings means a licence; below that, registration. Businesses that were already lending when the Regulations commenced must apply by 29 March 2027. See our articles on the KES 20 million licence or registration test and the March 2027 deadline for unlicensed lenders.

Frequently asked questions

This article is general information on Kenyan law as at its publication date, not legal advice. Reading it does not create an advocate and client relationship.