Central Bank of Kenya (CBK) Governor Dr Kamau Thugge on Monday, December 4, defended the move to reinstate charges on mobile bank services.
In response to questions before the Senate Committee on Finance and Budget, Dr Thugge said the bank charges were reintroduced in December 2022 after consultation with commercial banks and payment services providers.
This, he said, was after the waiver of charges period reached during the Covid-19 pandemic in March 2020 lapsed.
According to him, the reintroduction of charges was anchored on CBK’s mandate and regulatory framework which is aimed at facilitating sustainable growth of the financial sector.
In addition, the Governor explained that the move was aimed at increasing affordability, transparency and disclosure of fees and charges to protect Kenyans.
“Re-introduction of charges was anchored on CBK’s mandate and regulatory framework which is aimed at facilitating sustainable growth of the financial sector, and more critically increasing affordability,” the Governor said in his response.
Governor speaks on miscreants targeting bank accounts
His response came after a question raised by Nandi Senator Samson Cherargei on the reintroduction.
In response to cases of miscreants targeting bank accounts, Governor Thugge said the Central Bank of Kenya and various banks have put in place legal and regulatory framework to mitigate fraud risk.
According to the Governor, the new framework requires banks to have robust systems with adequate internal controls to detect, prevent and mitigate risk of fraud.
The governor also addressed concerns about Predatory Asset-based Lending Companies raised by Migori Senator Eddy Oketch especially in the digital space.
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In his response, Dr. Thugge stated that the Central Bank of Kenya Amendment Act, 2021, and the Central Bank of Kenya (Digital Credit Providers) Regulations, 2022 provided for licensing and regulation of previously unregulated Digital Credit Providers (DCPs) by CBK.
CBK Governor on high interest rates
According to him, Assets- based lending companies fall within the definition of digital credit business under CBK (Digital Credit Providers) Regulations, 2022.
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As such, failure to comply with the set regulations on the part of the lenders would warrant action.
In particular, the Governor responded to a question by Senator. Cherargei on high interest rates charged on loans offered by Momentum Credit Company Limited.
The CBK Governor informed the Committee that the company, Momentum Credit Company Limited, is not a licensed Microfinance Bank.
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However, Thugge explained that it had submitted an application to CBK to be licensed as Digital Credit Provider, which was yet to be processed.
As a condition to securing a license, the CBK Governor noted that he had directed Momentum Credit Company Limited to first address the issue of high interest rates and Court cases.
However, the Senators affirmed their dissatisfaction and gave him 14 days to provide detailed responses.
