cbkThe Central Bank of Kenya (CBK), will get more powers to deal with rogue financial institutions and enhance its supervisory role under new proposed legislation.
National Treasury Cabinet Secretary, Mr. Henry Rotich, said the proposed law approved by the Cabinet two weeks ago, will enable the regulator play a more proactive role.

The New Central Bank of Kenya Bill seeks to bring on board best international practice and recent developments in Central Banking Law. Mr. Rotich spoke when the Bank started anniversary celebrations which climax next year when the bank turns 50.
The proposed law which is set to be debated in Parliament, would clearly define the objectives, functions and powers of the Central Bank and reinforce the primary objective of the bank with price and financial stability as a secondary objective.
“It will also provide for an effective autonomous Monetary Monetary Policy Committee with a framework of instrument autonomy while providing accountability and transparency of its decisions”, he said.
“We expect that one of the activities for the CBK@50 is the launching of the new currency (as provided in the constitution), just like founding President Jomo Kenyatta did on 14 September 1966 when he launched the new Kenyan currency and Central Bank opened its doors”, said Mr. Rotich.
CBK Governor, Dr. Patrick Njoroge said they would emphasize further deepening of financial markets, greater supervisory vigilance, and increased market discipline, smarter regulation, inclusive banking through payment systems innovations, increased policy coordination with fellow central banks and regulators as well as a review of monetary policy frameworks.
“Notably, the Central Bank will endeavour to promote transparency in credit pricing and improve the monetary policy transmission to the real sector”, Dr. Njoroge said.
At the same time, Mr. Rotich said the legislation will establish proper governance structures for the regulator including a clear separation of functions between its board and management, with the former responsible for policy setting and oversight and the latter responsible for policy implementation.
“The Bill provides for board and management composition for efficient and effective decision-making and operations”, Mr. Rotich said. He said the Bill provides clear financial provisions that are critical to entrenching autonomy.
They include provision on capital, reserves, budgeting, profit allocation, and a re-capitalization framework for the bank that will see its paid up capital increase from Kshs.5 billion to Kshs.20 billion over the next three years.
“The National Treasury is consulting with key stakeholders, on reforming the financial sector supervision framework. This may include eventually move to a “twin peaks” model where all market conduct supervision, including for banks, would be under the FSA and all prudential supervision, including for non-banks, would be under the Central Bank of Kenya”, Mr. Rotich said.

============================== E N D =================================