Entry Instance

HTTP 200 OK
Allow: GET, PUT, PATCH, DELETE, HEAD, OPTIONS
Content-Type: application/json
Vary: Accept

{
    "id": 472044,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/472044/?format=api",
    "text_counter": 19,
    "type": "other",
    "speaker_name": "",
    "speaker_title": "",
    "speaker": null,
    "content": "(2) Introduction of agency banking in 2010. Agency banking has allowed banks to provide banking services through third party agents to avoid huge overheads of setting up and establishing branches. That is there in many areas. (3) Introduction of mobile phone financial services which offer convenient and economical channels of banking to customers. Again, that is true. Many of us can now undertake a lot of transactions from mobiles including M-shwari and M-pesa that offer a lot of opportunities. That roll out of mobile financial services has enabled banks to offer their services anytime and anywhere to the convenience of their customers. (4) The roll out of credit information sharing. I mentioned this earlier, that this also enables banks, within their framework, for credit risk management, to share information. This has really helped banks in that regard. (5) Promotion of consumer protection in the banking sector through the introduction of a prudential guideline on consumer protection by the CBK. (6) The establishment and strengthening of deposit insurance protection fund has also helped to guarantee depositors of their savings and increasing the minimum core capital of the banks from Kshs250 billion in 2008 to Kshs1 billion in 2012 to promote strong banks and competition within the sector. (7) Establishment of a Committee on Private Sector Credit and Mortgage. In January, 2014, the National Treasury constituted a very high level committee to explore ways of enhancing private sector credit and mortgage financing in Kenya. Among other things, to also determine why our interest rates spread is very high; this is the difference between the lending rates and the deposits. They came up with a number of proposals. They are very lengthy, I will not go through them. But among them, and most importantly, is the introduction of what they call Kenya Bankers Reference Rate (KBRR). This rate will allow the banks to use it to determine the base. The difference between this and what existed before is, before we had what we called a base rate set up by individual banks. Now we have a KBRR which is set by the CBK Monetary Policy, which is uniform across the country. It captures all the costs that are needed. What the banks merely need to add is their premium. This was set last week when the CBK had a meeting. It was set at 9.13 per cent. The CBK has issued a lot of notices on this. We expect the banks to start reducing their rates because it is now based on the actual base that has been set. Of course, there are several other recommendations made by that committee in order to reduce the rates. Mr. Speaker, Sir, lastly, the last question sought was on the relationship between profit made by the CBK from lending to the banks and the profit made by the banks. The CBK discount window is the one that the CBK uses to lend, being the lender of the last resort. It is available to enable banks manage their short-term liquidity constraints. No bank can access money through the discount window while at the same time being able to participate in the inter-bank market as a lender. Therefore, banks are actually encouraged to address their liquidity challenges through the inter-bank lending. It is only when they are not able to access money from the inter-bank market that they are allowed and to discourage it, they normally charge the premium over and above the inter-bank rate. Again, there is a provision for that showing how much has been lent between 2009 to 2013 to banks and comparing that with the profits earned by CBK. The electronic version of the Senate Hansard Report is for information purposes only. A certified version of this Report can be obtained from the Hansard Editor, Senate."
}