MICROCAPITAL BRIEF: In Kenya, Chase Bank Creates Rafiki Deposit-Taking Microfinance Institution

Chase Bank, a US-based commercial bank, is reportedly looking beyond the business model of “corporate giants” in Kenya by creating a deposit-taking microfinance institution (DTM) subsidiary, Rafiki Deposit Taking Microfinance Kenya Limited, to attract clients who have “outgrown” traditional microfinance institutions (MFIs) [1].

The Microfinance Act of 2008 allows the Central Bank of Kenya (CBK), the country’s central banking authority, to license DTMs to receive money by way of deposits and for loaning out to micro- and small enterprises and low-income households. Traditional MFIs can issue loans but are not allowed to accept deposits. CBK has authorized two categories of DTMs: “nationwide DTMs” that may establish operations in any part of the country and “community DTMs” that are restricted to operating within specific administrative boundaries. As of October 2011, CBK has licensed six DTMs: (1) Faulu Kenya Deposit Taking Micro-finance Limited; (2) Kenya Women Finance Trust Deposit Taking Micro-finance Limited; (3) Uwezo Deposit Taking Micro-finance Limited; (4) Small and Micro Enterprise Programme; (5) Remu DTM Limited: and (6) Rafiki Deposit Taking Microfinance Kenya Limited. The DTMs are also becoming a source of funds for MFIs that used to borrow from commercial banks.

CBK reports that as of April 2011, DTMs had 47 branches nationwide and had mobilized deposits worth KES 9 billion (USD 89 million) with a total loan portfolio value of KES 15 billion (USD 147 million).

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 deposit-taking microfinance institutions (DTMs). Professor Njuguna Ndung’u was appointed governor of the central bank in March 2007.

Sources and Additional Resources:

[1] Business Daily, “Micro-lenders face tough odds as they battle banks to win customer loyalty,” http://www.businessdailyafrica.com/Micro+lenders+face+tough+odds+as+they+battle+banks+/-/539552/1230230/-/item/0/-/2cyp7az/-/index.html

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.org story, January 20, 2011, “MICROCAPITAL BRIEF: Kenyan Microfinance Start-Up Remu DTM Limited Acquires Deposit-Taking License,” https://www.microcapital.org/microcapital-brief-kenyan-microfinance-start-up-remu-dtm-limited-acquires-deposit-taking-license/

MicroCapital.org story, December 29, 2010, “MICROCAPITAL BRIEF: Small and Micro Enterprise Programme (SMEP) of Kenya Licensed to Take Deposits,” https://www.microcapital.org/microcapital-brief-small-and-micro-enterprise-programme-smep-of-kenya-licensed-to-take-deposits/

MicroCapital Universe Profile: Central Bank of Kenya (CBK), 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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