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{
    "id": 1508173,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1508173/?format=api",
    "text_counter": 143,
    "type": "speech",
    "speaker_name": "Kikuyu, UDA",
    "speaker_title": "Hon. Kimani Ichung’wah",
    "speaker": null,
    "content": "Cooperatives considered all provisions that touch on the Kenya Accreditation Service Act, the Scrap Metal Act, the Special Economic Zones Act, the Kenya Industrial Research and Development Institute Act, and the National Electronic Single Window System Act. The Departmental Committee on Finance and National Planning considered all the other provisions. This is an omnibus Bill. It is called the Business Laws (Amendment) Bill because it seeks to amend a number of statutes. Top among the statutes being amended is the Banking Act, the Central Bank of Kenya Act, the Microfinance Act, the Standards Act, the Kenya Accreditation Service Act, and the Scrap Metal Act. I have written to the Speaker on some amendments to the Scrap Metal Act, and I am sure he will make a communication withdrawing some amendments. It is principally on the basis that we legislated the Statute Law (Miscellaneous Amendments) Bill about two weeks ago. That Bill is already in the Senate. Amendments proposed in this Bill to the Scrap Metal Act are similar to what we already legislated. To avoid duplication, I have written to the Speaker, withdrawing all those provisions. As Members contribute, it is good to note that I intend to withdraw provisions relating to the Scrap Metal Act. This Bill also has provisions on the Special Economic Zones Act and the Kenya Industrial Research and Development Institute Act. I am trying to be quick. Bear with me. Members will note that on the Banking Act, Clause 2 of the Bill seeks to introduce dissuasive penalties against institutions and Credit Reference Bureaus (CRBs) that fail to comply with the provisions of the law and directions issued by the Central Bank, either through prudential guidelines or other statutes established in law. Clause 3 of the Bill prescribes a penalty not exceeding Ksh20 million for people who contravene the provisions of the Act and prudential guidelines of the Central Bank. It also bears in mind that there are times when people refuse deliberately to comply with the law because they will make a gain or a profit out of non-disclosure or non-compliance. We are, therefore, making it very punitive so that if you do not comply, you either pay a penalty of up to Ksh20 million or three times the gross amount of the monetary gain made or loss avoided, whichever is higher. There is also penalty of Ksh3 million in the case of a corporate entity and Ksh1 million in the case of a natural person. This means the maximum penalty to pay is Ksh20 million or the higher of three times the gain or loss avoided. Non-compliance by financial institutions is usually because they want either to avoid making a loss or to make more money. If you make Ksh100 million profit or you refuse to comply so that you avoid making a loss of Ksh50 million, you will end up paying a penalty of three times the loss you avoided. That would be Ksh150 million, notwithstanding the maximum penalty of Ksh20 million, or Ksh300 million if the gain you made was Ksh100 million. Clause 3 speaks to provisions to increase the minimum core capital for banks and mortgage finance companies. The provision is to move the core capital to, at least, Ksh10 billion. This amount might sound very huge, but it is in line with the Basel Committee on Banking Supervision (BCBS), the Financial Action Task Force (FATF), and the Basel III Framework on Capital Adequacy requirement. This will encourage banks to merge and form bigger banks with larger core capital, hence banks will assure Kenyans that they will never ever lose their deposits. Banks that are not well capitalised or cannot lend tend to collapse when there are small shocks in the economy or in the banking sector. Between 2015 and 2018, at least, two or three banks collapsed in this country. Remember teachers tried to buy Spire Bank through Mwalimu National Sacco. Chase Bank and Imperial Bank also collapsed. To avoid that situation, you encourage banks that do not have adequate capital to merge and form bigger banks. That will create a competitive banking industry because banks that are well-capitalised can offer better credit facilities."
}