The Central Bank of Kenya (CBK) has tightened grip on the oversight role of banks with a new set of rules carrying hefty penalties in case of violation.
- •Some violation carries penalty of up to twenty million for institutions found in breach, while individual culprits face fine of up to one million.
- •Lenders will be more than ever vigilant on staff hire especially in senior positions, shareholders, loan issuance and seek approval from the apex bank before opening, relocating or closing a place of business.
- •On financial statements, institutions will be required to exhibit audited financial statements in a conspicuous place in every office and branch in Kenya in accordance with the minimum financial disclosure requirements.
The draft rules state that an institution or person who appoints or elects a person as a director or senior officer without certification by CBK that the person is fit for such position commits a violation and is liable, in the case of an institution to a penalty not exceeding Sh5 million and where the violation is committed by a natural person, a penalty not exceeding one million.
“An institution or person who does not terminate the employment of a person who has been disqualified by CBK from managing or controlling an institution commits a violation liable for Sh8 million for an institutional offender or Sh1 million for natural person offender,” CBK Kamau Thugge says in the Draft Regulations.
Institutions who purchase, acquires or holds any land or any interests in land in excess of the proportion of an institutions core capital have also been put on notice.
In relation to loan, advance or credit facility, the draft states that an institution that does not review, classify or make appropriate and adequate provisions and write-offs for loans and assets as prescribed by CBK commits a violation and is liable, upon assessment, in the case of an institution to a penalty not exceeding Sh20 million.
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