MICROCAPITAL BRIEF: Central Bank of Kenya to Allow Deposit-Taking Microfinance Institutions (DTMs) to Use Agents to Provide Financial Services

The Central Bank of Kenya (CBK), Kenya’s central banking authority, has reportedly issued guidelines allowing deposit-taking microfinance institutions (DTMs) to use agents to provide financial services in an effort to promote financial inclusion of the “unbanked and under-banked population” [1]. The agents contracted by DTMs will have to be approved by CBK. CBK will have the authority to access agent information without prior notice. Additionally, DTMs will be required to submit information regarding agent-related fraud, theft or customer complaints and the remedial measures taken to address the issues [2]. CBK reports that as of April 2011, DTMs had 47 branches nationwide that had mobilized deposits worth KES 9 billion (approximately USD 100 million) with a total loan portfolio value of KES 15 billion (approximately USD 172 million).

To view the full text of CBK issued guidelines for appointment and operation of agents by DTMs, you may visit: http://www.centralbank.go.ke/downloads/bsd/MFI/GUIDELINE%20ON%20THE%20APPOINTMENT%20AND%20OPERATIONS%20OF%20THIRD%20PARTY%20AGENTS%20BY%20DTMS.pdf.

By Nisha Koul, Research Associate

About Central Bank of Kenya (CBK): Established in 1966, the Central Bank of Kenya is the country’s central banking authority. CBK enacted the Microfinance Act in 2008 to pave the way for the licensing of microfinance institutions (MFIs) that take deposits from the public, known as deposit-taking microfinance institutions (DTMs). CBK reports that as of April 2011, DTMs had 47 branches nationwide that had mobilized deposits worth KES 9 billion (approximately USD 100 million) with a total loan portfolio value of KES 15 billion (approximately USD 172 million).

Sources and Additional Resources:

[1] The Standard, “Deposit-takers set to use agency models,” http://www.standardmedia.co.ke/InsidePage.php?id=2000049309&cid=14&j=&m=&d=

[2] Nation, “Deposit taking microfinance agents to be put on check,” http://www.nation.co.ke/business/news/Deposit+taking+microfinance+agents+to+be+put+on+check/-/1006/1296088/-/rtdmdtz/-/

MicroCapital.org story, October 5, 2011, “MICROCAPITAL BRIEF: In Kenya, Chase Bank Creates Rafiki Deposit-Taking Microfinance Institution,” https://www.microcapital.org/microcapital-brief-in-kenya-chase-bank-creates-rafiki-deposit-taking-microfinance-institution/

MicroCapital.org story, April 12, 2011, “MICROCAPITAL BRIEF: Central Bank of Kenya to Connect Deposit-Taking Microfinance Institutions (MFIs), Savings and Credit Cooperatives (SACCOs) with Existing Reporting Systems; Small and Micro Enterprise Programme (SMEP) Announces Plans to Transform into Commercial Bank,” https://www.microcapital.org/microcapital-brief-central-bank-of-kenya-to-allow-deposit-taking-microfinance-institutions-mfis-savings-and-credit-cooperatives-saccos-to-report-on-borrowers-small-and-micro-enterprise-programm/

MicroCapital Universe Profile: Central Bank of Kenya, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Central+Bank+of+Kenya+%28CBK%29

Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/

 

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