In a landmark July 17 ruling, a Kenyan court dealt a major blow to unlicensed digital lenders, holding that entities operating without a Central Bank of Kenya (CBK) license cannot rely on the judicial system to recover debts from defaulting borrowers. The Small Claims Court established that an unlicensed lender lacks the legal capacity to enforce rights originating from lending operations conducted without regulatory clearance. The lender told the court that a registered caveat prevented the sale of the vehicle to recoup the debt. Prior to evaluating the underlying merits of the claim, the court scrutinized the lender’s legal standing to institute proceedings. For loan providers, particularly digital lending apps, the precedent makes securing CBK approval an essential prerequisite for legal operations and debt enforcement.