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CBK warns banks of stiff sanctions if found aiding graft

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Central Bank of Kenya (CBK) Governor Patrick Njoroge
Central Bank of Kenya (CBK) Governor Patrick Njoroge. FILE PHOTO | NMG  

Commercial banks found to be handling graft proceeds will face stiff sanctions, Central Bank of Kenya (CBK) Governor Patrick Njoroge warned on Thursday.

Dr Njoroge, who addressed bankers at a banking forum organized by sector lobby Kenya Bankers Association (KBA) in Nairobi, said that the regulator is ready to crack the whip again on any rogue bank which helps ship out money from public institutions illegally obtained from graft.

“Two weeks ago we informed the Kenyan people of the action we took against some your institutions because of non-compliance with integrity laws. Make no mistake, it was not easy, we considered all the possible negative outcomes from those actions,” said Dr Njoroge at the 7th Annual Research Conference by the KBA.

“But we will not hesitate to do it again in under similar circumstances. Banks must steer away from being used conduits for of ill-gotten funds,” he added.

He said local bank heads owe a duty of care to the public not to abet or aid graft in public institutions.

“The Kenyan people including “Wanjiku” (ordinary Kenyan) demand that, from all of us, and will take us very unkindly if we look the other way,” Dr Njoroge said.

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Mid this month the CBK fined five commercial banks a total of Sh392.5 million in connection with the theft of funds at the National Youth Service (NYS).

Those penalised are KCB Group #ticker:KCB (Sh149.5 million), Equity Bank #ticker:EQTY (Sh89.5 million), Standard Chartered Bank-Kenya #ticker:SCBK (ShSh77.5 million), Diamond Trust Bank #ticker:DTK (Sh56 million) and Co-operative Bank of Kenya #ticker:COOP (Sh20 million).

A day later, the Director of Public Prosecutions (DPP) Noordin Haji said that implicated chief executives and employees of the banks who helped ship out billions of shillings from the NYS will be arrested and prosecuted. The law requires all financial institutions including banks, insurance companies and Saccos to file with the Financial Reporting Centre (FRC) daily reports on transactions above Sh1 million and those deemed suspect.

Bank executives and persons who are convicted for handling illicit cash face a Sh1 million fine and a three-year jail term, while institutions including banks, credit unions facilitating such deals could be fined up to Sh20 million upon conviction. Banks could also lose their licences.

The two day KBA event, themed “Credit Market Dynamics in an Evolving Regulatory and Market Participants’ Environment”, has brought together banking experts and stakeholders to assess ways in which the financial system can “promote efficient credit allocation to the economy.”

“This forum brings together a rich mix of thought leaders from both the public and private sectors to explore challenges in the financial sector with a view to explore what works and what doesn’t,” said KBA CEO Habil Olaka.

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World Bank pushes G-20 to extend debt relief to 2021

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World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.

“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.

He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.

The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.

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People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.

For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.

Debt burdens, already unsustainable for many countries, are rising to crisis levels.

“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.

ALSO READ:Global Economy Plunges into Worst Recession – World Bank

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Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans

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The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.

“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”

According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.

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Tighter Reins on Platforms for Mobile Loans

The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.

Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.

Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.

SEE ALSO: Central Bank Unveils Measures to Tame Unregulated Digital Lenders

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Scope Markets Kenya customers to have instant access to global financial markets

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NAIROBI, Kenya, Jul 20 – Clients trading through the Scope Markets Kenya trading platform will get instant access to global financial markets and wider investment options. 

This follows the launch of a new Scope Markets app, available on both the Google PlayStore and IOS Apple Store.

The Scope Markets app offers clients over 500 investment opportunities across global financial markets.

The Scope Markets app has a brand new user interface that is very user friendly, following feedback from customers.

The application offers real-time quotes; newsfeeds; research facilities, and a chat feature which enables a customer to make direct contact with the Customer Service Team during trading days (Monday to Friday).

The platform also offers an enhanced client interface including catering for those who trade at night.

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The client will get instant access to several asset classes in the global financial markets including; Single Stocks CFDs (US, UK, EU) such as Facebook, Amazon, Apple, Netflix and Google, BP, Carrefour;  Indices (Nasdaq, FTSE UK), Metals (Gold, Silver); Currencies (60+ Pairs), Commodities (Oil, Natural Gas).

The launch is part of Scope Markets Kenya strategy of enriching the customer experience while offering clients access to global trading opportunities.

Scope Markets Kenya CEO, Kevin Ng’ang’a observed, “the Sope Markets app is very easy to use especially when executing trades. Customers are at the heart of everything we do. We designed the Scope Markets app with the customer experience in mind as we seek to respond to feedback from our customers.”

He added that enhancing the client experience builds upon the robust trading platform, Meta Trader 5, unveiled in 2019, enabling Scope Markets Kenya to broaden the asset classes available on the trading platform.

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