The new Prudential Guidelines and Risk Management Guidelines issued by the Central Bank of Kenya (CBK) for all applicants intending to be licensed, conduct banking, mortgage or financial business in Kenya will come into effect on 1st January 2013.
“Pursuant to its mandate of fostering the liquidity, solvency and proper functioning of a stable market based financial system; the Central Bank has conducted a comprehensive review of the Prudential Guidelines and Risk Management Guidelines currently in use: according to circular to banks signed by CBK Director in charge of Bank Supervision F.K Pere.
“The review has been necessitated by developments in the national, regional and global arenas and the need to proactively strengthen the regulatory framework of banks and other institutions licensed pursuant to the Banking Act.” The circular added.
The Guidelines issued under Section 33(4) of the Banking Act, empowers the Central Bank of Kenya to issue guidelines to be adhered to by institutions in order to maintain a stable and efficient banking and financial system. CBK had put out the guidelines for comments by the public and other stake holders up to September.
The Central Bank was expected to issue the revised Guidelines which apply to banks and their duly appointed agents on 1st August 2012 but pushed forward the release date to give more time for consideration of stakeholders views.
The Guidelines provide guidance on the conditions applicants must fulfill to be eligible to be granted a license to conduct banking, financial or mortgage business in Kenya. The Guideline does not however, address the authorization procedures for Representative Offices in Kenya, which are provided for in the Prudential Guideline on Representative Offices in Kenya.