Nairobi, July 26 -- A Nairobi Small Claims Court has struck out two debt recovery suits filed because the digital lenders seeking the unpaid loans were not licensed by the Central Bank of Kenya (CBK), setting a precedent in tackling the non-performing loans.

Resident Magistrate Gladys Kiama ruled that Tri-State Capital Limited and Mombo iCapital Limited lacked the legal capacity to enforce their loan agreements in court.

The lenders had separately sought to recover Sh500,000 and Sh162,297, respectively, from two borrowers.

But the magistrate said the companies failed to show they were legally authorised to carry out money-lending business.

The suit has cast a spotlight on a December 2021 law, which empowers the CBK to license and over...