The Central Bank of Kenya in Nairobi. PHOTO | FILE | NMG
The Central Bank of Kenya (CBK) is set for an expanded mandate after a move by the National Treasury to have the banking sector regulator oversee credit guarantee companies.
The exchequer wants the various credit guarantee schemes in the country, including its own unit, spun out into separate legal entities that will fall under the ambit of CBK.
Credit guarantee companies refer to businesses providing a guarantee to a lender through the absorption of all or a portion of the lender’s risk on credit facility made to a borrower in the case of defaultThe National Treasury has moved proposed amendments to the CBK Act for purposes of regulation and supervision of credit guarantee business.
CBK shall be expected to issue new licenses to the credit guarantee businesses while designating capital adequacy standards and related requirements for the firms, prescribing the minimum liquidity requirements and permissible and prohibited activities.
The apex bank shall also oversee the integrity of the credit guarantee business including anti-money laundering/combating the financing of terrorism standards among other roles.
The formation of credit guarantee schemes forms part of a new draft policy which seeks to establish a regulatory framework for the operation of the entities in the country.
The exchequer's own credit guarantee scheme will be spun out to a new company to be known as the Kenya Credit Guarantee Scheme Company.
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