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"id": 193516,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/193516/?format=api",
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"type": "speech",
"speaker_name": "Mr. Kimunya",
"speaker_title": "The Minister for Finance",
"speaker": {
"id": 174,
"legal_name": "Amos Muhinga Kimunya",
"slug": "amos-kimunya"
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"content": "That does not mean that the principal is not payable in time. The Commissioner has other leverage to ensure that it is actually paid when it is due. Mr. Speaker, Sir, I have also continued to receive complaints of transit vehicles being diverted into the local markets and thus posing security and revenue risk to our country. In order to avoid such transit vehicles being diverted, all imported vehicles for home use will be registered before Customs release, while commercial vehicles will be registered within 14 days of the vehicle's inspection. This will also ensure that ownership of vehicles is properly registered to enable Kenyans use their vehicles as collateral to secure loans for personal development. That way, we can distinguish a vehicle awaiting registration from one which is on transit. Mr. Speaker, Sir, currently, our excise taxes are administered under the old Customs and Excise Act, whose Customs Sections were replaced by the East African Community Customs Management Act. To ensure that Excise taxation is appropriately covered in a modern legal framework, I propose to replace the existing legislation with a formal Excise Bill. I intend to table that Bill in this august House before the end of this calendar year. Mr. Speaker, Sir, on measures to enhance the financial sector reforms, can I start with the strengthening of our banking sector? In order to widen the scope of monetary policy instruments for regulating liquidity in the money markets, I propose to allow the Central Bank of Kenya (CBK) to issue Bank Bills and take time deposit placements by commercial banks. These new instruments, together with the existing Repurchase Agreement, popularly known as \"REPOS\", will give the CBK the flexibility and the muscle to deal with the current inflationary pressure through better management of liquidity in the economy. June 12, 2008 PARLIAMENTARY DEBATES 1157 Mr. Speaker, Sir, some foreign exchange bureaus, although licensed by the Central Bank of Kenya (CBK), breach the Central Bank Act, or the foreign bureaus exchange guidelines. In order to give the CBK an additional instrument to deal with the errant foreign exchange bureaus, I propose to empower the Bank to prescribe penalties to be paid by authorised dealers who fail or refuse to comply with any statutory guidelines issued by it. Mr. Speaker, Sir, Vision 2030 envisages a vibrant and globally competitive financial sector, driving high levels of savings and financing our investment needs. To achieve these measures, it is necessary to carry out a number of reforms, including reforming the banking sector to facilitate the transformation of the large number of small banks in our economy to fewer but larger and stronger banks. To this end, I propose to amend the Banking Act to raise the minimum core capital requirement for banks and mortgage financial institutions from the current Kshs250 million and Kshs200 million respectively to Kshs1 billion over a period of two years. Over 90 per cent of the banks are already in this range. Mr. Speaker, Sir, the Banking Act restricts institutions from paying out dividends until provision is made for bad and doubtful debts in addition to restricting the paying of dividends until provision is made for normal loans, in addition to other assets. In view of this, I propose to restrict institutions from paying dividends on their shares, or making any form of distribution to their shareholders until adequate provision is made for loan advances and other assets in accordance with the guidelines prescribed by the CBK. Mr. Speaker, Sir, institutions licensed under the Banking Act do from time to time accumulate funds, or other financial assets, which for one reason or another have not been claimed by their customers or depositors, or the depositors are not even known. The funds, or assets, remain within the institutions while the beneficiaries continue to suffer. In order to address these challenges, I have constituted a task force, consisting of stakeholders in the financial sector, to look into the matter with a view to establishing the magnitude of the unclaimed financial assets currently being held by these institutions, and to propose the way forward, including the amendment of the relevant laws, to ensure these unclaimed financial assets are in safe hands and the beneficiaries are paid when they resurface. I intend to bring those measures within a comprehensive Banking Act review later in the year. Mr. Speaker, Sir, on strengthening of our insurance industry, the Insurance Act restricts the amount an insurance company can invest in the shares, debentures or loans of any one company to five per cent, for both long term as well as general insurance business. Several insurance companies have in the recent past made presentations to the Commissioner of Insurance to have this requirement removed, arguing that shares quoted on the stock exchange are secure and provide good returns on investments. In order to address the concern raised by the insurance industry, I propose to increase the level of investments by insurance companies in shares or debentures, corporate bonds or financial institutions from five per cent to 10 per cent. Mr. Speaker, Sir, some insurance companies also take too long to pay, or in some cases do not pay claims submitted by the insured persons, even when we pass a law to say so, or when the court has ruled in favour of the insured. To take action on such insurance companies, I propose to empower the Commissioner of Insurance to levy a penalty of five per cent of the amount awarded by the court, if a claim is not paid after 90 days."
}