The Central Bank of Kenya (CBK) has published a list of licensed Microfinance Banks in Kenya.
In a notice seen dated April 24, CBK stated that the publication of licensed banks is pursuant to section 8 (2) of the Microfinance (Deposit-Taking Microfinance Institutions) Regulations, 2008.
“The Central Bank of Kenya (CBK) hereby notifies the general public of the following institutions duly licensed to carry out the deposit-taking microfinance business in Kenya,” read part of the notice.
Licenses are issued in accordance with Section 6 (1) of the Microfinance Act, 2006, and Regulation 5 (3) of the Microfinance Regulations, 2008 that legally authorizes the applicant to commence microfinance bank business.
The Act allows microfinance banks (MFBs) licensed by the Central Bank of Kenya to mobilize deposits from the general public, thus promoting savings, competition, efficiency and financial access.
CBK License 14 Microfinance Banks
Among the licensed Microfinance Banks are Faulu Microfinance Bank Limited, Kenya Women Microfinance Bank PLC, Salaam Microfinance Bank Limited, and SMEP Microfinance Bank PLC.
LOLC Kenya Microfinance PLC, Rafiki Microfinance Bank Limited, Branch Microfinance Bank Limited, Sumac Microfinance Bank Limited and U&I Microfinance Bank Limited are also among those licensed.
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Also in the list is Umba Microfinance Bank Limited, Choice Microfinance Bank Limited, Caritas Microfinance Bank Limited, On It Microfinance Bank Limited and Muungano Microfinance Bank Limited.
Over the past years, microfinance banks have played a crucial role in expanding access to financial services across Kenya.
What are they?
Microfinance banks are classified into two categories: community-based microfinance banks and nationwide microfinance banks.
These are financial institutions that offer banking services to low-income individuals or groups.
They have proved instrumental in expanding financial inclusion or access to financial services, throughout Kenya.
As financial intermediaries, MFBs play a complimentary role to commercial banks, as opposed to being competitors, by offering a vital service channel to the significant proportion of the population in Kenya that lacks access to commercial banks.
The microfinance industry therefore plays a pivotal role in deepening financial markets and enhancing access to financial services by a significant proportion of the population.
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Application for Microfinance Bank License
1) Complete and submit Form 1 of the First Schedule to the Microfinance (Deposit Taking Microfinance Institutions) Regulations 2008 to CBK along with required documents, including:
a) Certified copies of Certificate of Incorporation, tax PIN certificate, and Memorandum and Articles of Association, verified notification of registered place of business and a non-refundable application fee of Ksh. 5,000.
b) Declaration of no existing scheme of arrangement with creditors, bank statement indicating earmarked funds or Government Treasury Bills/Bonds.
C) distribution of core capital among promoters/shareholders and tax compliance statements for entity, shareholders, and officers.
2) Provide evidence of minimum core capital (Ksh. 20 million for “community” and Ksh. 60 million for “nationwide” microfinance bank business):
3) Prepare and submit a feasibility study and business plan covering various aspects including governance structure, financial statements, market analysis, and risk management policies.
4) Submit “Fit and Proper Forms” for significant shareholders and proposed directors, including CVs, academic/professional certificates, and evidence of fund sources.
5. Payment of license fees to the Central Bank by bankers’ cheque or such other mode of payment that the Central Bank may prescribe (Ksh 150,000 for nationwide microfinance bank, and Ksh 100,000 for community microfinance bank).
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