Kenya Act or statute

Parliament of Kenya

Microfinance Act

Jurisdiction: Kenya
Structure: 58 provisions
Citation: Cap. 493C
Dates: As at 27 Dec 2024

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Dates: As at 27 Dec 2024

Source attribution: Source: Kenya Law

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Purpose and legislative effect

“The Act may be cited as the Microfinance Act.”

The Act may be cited as the Microfinance Act. Defines an institution’s place of business as premises or a structure owned or occupied by a third party and used under an agreement between the institution and the third party for deposit-taking microfinance business. Section 3 applies to deposit-taking and non-deposit-taking microfinance businesses, allows prescribing conduct and exemptions for non-deposit-taking businesses, and bars exemptions where a non-deposit-taking business has annual revenue exceeding five hundred thousand shillings; it also lists certain excluded institutions. The Central Bank may restrict a licence where revocation is not justified, and such restriction is to be in accordance with subsection (2). Only a company registered under the Companies Act whose main objective is to carry out non-deposit-taking microfinance business and licensed under this Act may carry out non-deposit-taking microfinance business; contravention is an offence with specified penalties.

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PRELIMINARY - 1. Short title

The Act may be cited as the Microfinance Act.

Section 1

PROVISIONS RELATING TO GOVERNANCE - 14. Prohibited activities

The section states that a person who contravenes the section commits an offence and is liable on conviction to a fine not exceeding one hundred thousand shillings, or to imprisonment for a term not exceeding three years, or to both.

Section 14

PROVISIONS RELATING TO GOVERNANCE - 28. Appointment of internal auditor

Every institution must appoint an internal auditor; the internal auditor must report to the Board of Directors; a person may not be appointed unless they hold specified professional qualifications and relevant microfinance experience.

Section 28

PROTECTION OF DEPOSITS - 39. Contributions to the Deposit ProtectionFund

Section 39

MISCELLANEOUS PROVISIONS - 54. Transitional provision

Section 54

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Showing 58 of 58 provisions

Provision 28Offence 21Amendment 3Commencement 3

Part I

PRELIMINARY

§ 1PRELIMINARY - 1. Short titleShort title

The Act may be cited as the Microfinance Act.

Section 1. Short title Section This Act may be cited as the Microfinance Act.

Section 1Verify source

§ 2PRELIMINARY - 2. InterpretationInterpretation

Defines an institution’s place of business as premises or a structure owned or occupied by a third party and used under an agreement between the institution and the third party for deposit-taking microfinance business.

Section 2. Interpretation Section an institution’s place of business operated within premises or structure owned or occupied by a third party by means of an agreement between the institution and the third party in the provision of deposit-taking microfinance business; or

Section 2Verify source

§ 3PRELIMINARY - 3. ApplicationProvision

Section 3 applies to deposit-taking and non-deposit-taking microfinance businesses, allows prescribing conduct and exemptions for non-deposit-taking businesses, and bars exemptions where a non-deposit-taking business has annual revenue exceeding five hundred thousand shillings; it also lists certain excluded institutions.

Section 3. Application Section 3(1)(a) every deposit-taking microfinance business ; Section 3(1)(b) a non-deposit-taking microfinance business in the manner prescribed under subsection (2)(a) unless exempted under subsection (2)(b) . Section 3(2)(a) prescribing measures for the conduct of nondeposit-taking microfinance business; and Section 3(2)(b) exempting any non-deposit-taking microfinance business from application of this Act. Section 3(2A) Despite subsection (2)(b) , an exemption shall not be granted to a non-deposit taking microfinance business whose annual revenue exceeds five hundred thousand shillings. Section 3(3)(a) a bank , a financial institution or a mortgage finance company licensed under the Banking Act ( Cap. 488 ); Section 3(3)(b) a building society registered under the Building Societies Act ( Cap. 489 ); Section 3(3)(c) the Kenya Post Office Savings Bank established under the Kenya Post Office Savings Bank Act ( Cap. 493B ).

Section 3Verify source

Part II

LICENSING PROVISIONS

§ 10LICENSING PROVISIONS - 10. Restriction of a licenceProvision

The Central Bank may restrict a licence where revocation is not justified, and such restriction is to be in accordance with subsection (2).

Section 10. Restriction of a licence Section 10(1) Where it appears to the Central Bank that there are reasonable grounds for the revocation of a licence, but that the circumstances are such as not to justify a revocation, the Central Bank may restrict the licence in accordance with subsection (2) . Section 10(2)(a) a limit on the duration of the licence for a period, not exceeding one year; or Section 10(2)(b) such additional conditions for the protection of depositors as the Central Bank may deem necessary.

Section 10Verify source

§ 4LICENSING PROVISIONS - 4. Qualifications for carrying outdeposit-taking microfinance businessOffence

Only companies registered under the Companies Act whose main objective is deposit-taking business, or wholly-owned subsidiaries of banks or financial institutions with that objective, may carry out deposit-taking microfinance business if they are licensed under this Act; duly approved agencies conducting deposit-taking on behalf of an institution are not subject to that requirement; the institution is liable for agency acts; contravention is an offence with a fine up to one hundred thousand shillings or imprisonment up to three years, or both.

Section 4. Qualifications for carrying outdeposit-taking microfinance business Section 4(1)(a) a company registered under the Companies Act ( Cap. 486 ) whose main objective is to carry out such business; or Section 4(1)(b) a wholly-owned subsidiary of a bank or a financial institution whose main objective is to carry out such business; and Section 4(1)(c) licensed under this Act. Section 4(2) The provisions of subsection (1) shall not apply to a duly approved agency conducting deposit-taking business on behalf of an institution . Section 4(3) Where an agency conducts deposit taking business on behalf of an institution in accordance with this Act, the institution shall be liable for the acts of the agency in so far as such acts relate to that business. Section 4(4) A person who contravenes the provisions of this section commits an offence and shall be liable, on conviction, to a fine not exceeding one hundred thousand shillings, or to imprisonment for a term not exceeding three years, or to both. [Act No. 10 of 2010 , s. 83.]

Section 4Verify source

§ 4ALICENSING PROVISIONS - 4A. Qualifications for carrying out non-deposit-taking microfinance businessOffence

Only a company registered under the Companies Act whose main objective is to carry out non-deposit-taking microfinance business and licensed under this Act may carry out non-deposit-taking microfinance business; contravention is an offence with specified penalties.

Section 4A. Qualifications for carrying out non-deposit-taking microfinance business Section 4A(1)(a) a company registered under the Companies Act whose main objective is to carry out a non-deposit taking microfinance business; and Section 4A(1)(b) licensed under this Act. Section 4A(2) A person who contravenes the provisions of this section commits an offence and shall be liable, on conviction, to a fine not exceeding one hundred thousand shillings, or to imprisonment for a term not exceeding three years, or to both. [Act No. 20 of 2024 , s. 15.]

Section 4AVerify source

§ 5LICENSING PROVISIONS - 5. Application for licenceProvision

An application for a licence to carry out deposit-taking or non-deposit-taking microfinance business must be made to the Central Bank in the prescribed form.

Section 5. Application for licence Section 5(1) An application for a licence to carry out deposit-taking business or non-deposit-taking microfinance business shall be made to the Central Bank , in the prescribed form. Section 5(2)(a) copy of the memorandum and articles of association or other instrument under which the company is incorporated; Section 5(2)(b) a verified official notification of the company’s registered place of business ; Section 5(2)(c) the prospective place of operation, indicating that of the head office and branches, if any; Section 5(2)(d) evidence that the company meets the minimum capital requirements prescribed in the Schedule; Section 5(2)(e) the prescribed fee; and Section 5(2)(f) objectives of the business; Section 5(2)(f)(i) objectives of the business; Section 5(2)(f)(ii) domestic economic situation; Section 5(2)(f)(iii) financial sector environment; Section 5(2)(f)(iv) legal framework; Section 5(2)(f)(v) risk analysis; Section 5(2)(f)(vi) economic and financial analysis; Section 5(2)(f)(vii) organizational structure; Section 5(2)(f)(viii) proposed management, detailing the professional qualifications, skills and relevant experience in deposit-taking business of the proposed managers; Section 5(2)(f)(ix) equity and ownership of the business; Section 5(2)(f)(x) such other requirement as the Central Bank may prescribe. [Act No. 20 of 2024 , s. 16.]

Section 5Verify source

§ 6LICENSING PROVISIONS - 6. Issuance or renewal of licenceSubstitution

The Central Bank must consider licence applications under section 5 and may grant licences if requirements are met and the prescribed fee is paid; it may also endorse and vary licence conditions, and may renew licences subject to subsection (4) and payment of the prescribed fee.

Section 6. Issuance or renewal of licence Section 6(1) The Central Bank shall consider every application made under section 5 and may, if satisfied that the applicant meets the requirements of this Act, grant a licence to the applicant upon payment of the prescribed fee. Section 6(2) The Central Bank may endorse on a licence granted under this section, such conditions as it considers necessary and may, from time to time, add, vary or substitute such conditions. Section 6(3) A licence issued under this Act shall, unless earlier revoked, be valid up to the 31st day of December of the year in which it is issued and may, on expiry, be renewed on application: Provided that where an application for its renewal is made, the licence shall be deemed to continue in force until the application is determined. Section 6(4)(a) made within three months of the expiry of the licence: Provided that a late application may be made upon payment of such penalty as may be prescribed; Section 6(4)(b) accompanied by the particulars specified in section 5 (2); and Section 6(4)(c) be considered in the same manner as an application under section 5 . Section 6(5) Subject to subsection (4) the Central Bank may renew an institution ’s licence upon payment of the prescribed fee.

Section 6Verify source

§ 7LICENSING PROVISIONS - 7. Categories ofdeposit-taking businessProvision

The Cabinet Secretary may prescribe categories of deposit-taking business.

Section 7. Categories ofdeposit-taking business Section For the purposes of this Act, the Cabinet Secretary may prescribe categories of deposit-taking business based on geographical, administrative or such other criteria as the Cabinet Secretary may deem necessary.

Section 7Verify source

§ 8LICENSING PROVISIONS - 8.Central Bank’s power of inspectionProvision

The Central Bank may, under a warrant issued by the High Court, enter premises and examine the books, accounts or records of any person believed to be carrying out deposit-taking business contrary to this Act.

Section 8.Central Bank’s power of inspection Section The Central Bank may, under a warrant issued by the High Court, enter any premises and examine the books, accounts or records of any person whom the Central Bank , on reasonable grounds, believes to be carrying out deposit-taking business contrary to the provisions of this Act.

Section 8Verify source

§ 9LICENSING PROVISIONS - 9. Revocation of licenceProvision

The Central Bank must publish in the Gazette the names of institutions whose licences have been revoked within seven days of revocation.

Section 9. Revocation of licence Section 9(1)(a) the licensee ceases to carry on deposit-taking business or non-deposit-taking microfinance business ; Section 9(1)(b) the institution is wound up, liquidated or otherwise dissolved; Section 9(1)(c) the Central Bank is reasonably satisfied that the business of the institution is being conducted in a manner detrimental to the interests of its depositors or customers; Section 9(1)(d) the institution has been amalgamated with another company or has been sold or its assets or liabilities have been transferred to another company without the approval of the Cabinet Secretary ; Section 9(1)(e) the licensee has contravened any of the conditions in the licence; or Section 9(1)(f) the licensee has contravened any of the provisions of this Act or any regulations made thereunder. Section 9(2) The Central Bank shall cause the names of institutions whose licences have been revoked to be published in the Gazette within seven days of the revocation. [Act No. 20 of 2024 , s. 17.]

Section 9Verify source

Part III

PROVISIONS RELATING TO GOVERNANCE

§ 11PROVISIONS RELATING TO GOVERNANCE - 11. Minimum capital requirementsAmendment

An institution must maintain the minimum capital requirements set out in the Schedule.

Section 11. Minimum capital requirements Section 11(1) An institution shall maintain the minimum capital requirements set out in the Schedule. Section 11(2) The Cabinet Secretary may, by order in the Gazette , amend the Schedule.

Section 11Verify source

§ 12PROVISIONS RELATING TO GOVERNANCE - 12. Minimum liquid assetsOffence

Institutions must hold minimum liquid assets as prescribed by the Central Bank; failure to comply can trigger a daily penalty interest charge up to 1% of the deficiency when called upon by the Central Bank.

Section 12. Minimum liquid assets Section 12(1) An institution shall maintain such minimum holding of liquid assets as may be prescribed by the Central Bank . Section 12(2)(a) notes and coins which are legal tender in Kenya; Section 12(2)(b) balances held at banks after deducting therefrom any balance owed to those banks; Section 12(2)(c) treasury bills and bonds which are freely marketable and re-discountable at the Central Bank ; or Section 12(2)(d) such other assets as the Central Bank may specify. Section 12(3) An institution which does not comply with the requirements of subsection (1) , within such period as the Central Bank may prescribe, shall be liable to pay, on being called upon to do so by the Central Bank , a penalty interest charge not exceeding one per cent of the amount of the deficiency, for every day during which the offence continues.

Section 12Verify source

§ 13PROVISIONS RELATING TO GOVERNANCE - 13. Place of businessOffence

A person must not open a branch or place of business outside Kenya, or open or close a branch or place of business in Kenya, without the prior approval of the Central Bank.

Section 13. Place of business Section 13(1)(a) open a branch or place of business outside Kenya; or Section 13(1)(b) open or close a branch or place of business in Kenya without the prior approval of the Central Bank . Section 13(2) A person who contravenes the provisions of this section commits an offence and shall be liable, on conviction, to a fine not exceeding one hundred thousand shillings, or to imprisonment for a term not exceeding three years, or to both. Section 13(3) The Central Bank may make regulations to prescribe the manner in which approvals shall be granted under this section. [Act No. 10 of 2010 , s. 84.]

Section 13Verify source

§ 14PROVISIONS RELATING TO GOVERNANCE - 14. Prohibited activitiesOffence

Section 14. Prohibited activities Section 14(1)(a) deleted by ActNo. 41 of 2013, s. 3 ; Section 14(1)(b) deleted by ActNo. 41 of 2013, s. 3 ; Section 14(1)(c) deleted by ActNo. 41 of 2013, s. 3 ; Section 14(1)(d) trust operations; Section 14(1)(e) investing in enterprise capital; Section 14(1)(f) wholesale or retail trade; Section 14(1)(g) underwriting or placement of securities; Section 14(1)(h) purchasing or otherwise acquiring any land except as may be reasonably necessary for the purpose of expanding the deposit-taking business ; or Section 14(1)(i) such other activity as the Central Bank may prescribe. Section 14(2) A person who contravenes the provisions of this section commits an offence and shall be liable, on conviction, to a fine not exceeding one hundred thousand shillings, or to imprisonment for a term not exceeding three years, or to both. [Act No. 41 of 2013 , s. 3.]

Section 14Verify source

§ 15PROVISIONS RELATING TO GOVERNANCE - 15. Declaration of dividendsOffence

No institution may pay dividends or make other distributions to shareholders until its capitalized expenditure is written off and provisions for bad and doubtful debts are made in accordance with subsection (2).

Section 15. Declaration of dividends Section 15(1) No institution shall pay dividends on its shares or make any other form of distribution to its shareholders until all its capitalized expenditure has been written off and provision has been made for bad and doubtful debts in accordance with subsection (2) . Section 15(2)(a) make provision for bad and doubtful debts before any profit or loss is declared; and Section 15(2)(b) ensure that such provision is adequate in accordance with such guidelines as may be prescribed by the Central Bank . Section 15(3) A person who contravenes the provisions of this section commits an offence and shall be liable, on conviction to a fine not exceeding fifty thousand shillings, or to imprisonment for a term not exceeding two years, or to both.

Section 15Verify source

§ 16PROVISIONS RELATING TO GOVERNANCE - 16. Application for loan or credit facilityProvision

Anyone may apply to an institution or non-deposit-taking microfinance business for a loan or credit facility; applicants must provide evidence of their ability to repay.

Section 16. Application for loan or credit facility Section 16(1) Any person may apply to an institution or non-deposit-taking microfinance business for a loan or credit facility. Section 16(2) A person who applies for a loan or credit facility under subsection (1) shall provide evidence of his ability to repay the loan or credit facility. [Act No. 20 of 2024 , s. 18.]

Section 16Verify source

§ 17PROVISIONS RELATING TO GOVERNANCE - 17. Limit on loans and credit facilitiesOffence

Institutions are prohibited from granting loans or credit facilities that exceed specified limits of their core capital and from granting such facilities secured by shares of their deposit-taking business; contravention is an offence punishable by a fine not exceeding fifty thousand shillings, or imprisonment up to two years, or both.

Section 17. Limit on loans and credit facilities Section 17(1) No institution shall grant a loan or credit facility to an end-user single borrower or his associates where the loan or credit facility, in the aggregate, exceeds such limit of its core capital as the Central Bank may prescribe. Section 17(2) No institution shall grant a loan or credit facility against the security of the shares of its deposit-taking business . Section 17(3) Any person who contravenes the provisions of this section commits an offence and shall be liable, on conviction, to a fine not exceeding fifty thousand shillings, or to imprisonment for a term not exceeding two years, or to both. [Act No. 4 of 2012 , s. 54.]

Section 17Verify source

§ 18PROVISIONS RELATING TO GOVERNANCE - 18. Insider lendingOffence

Institutions are prohibited from granting loans or credit facilities to associates or staff beyond limits prescribed by the Central Bank; contravention is an offence punishable by a fine up to 100,000 shillings or imprisonment up to three years, or both.

Section 18. Insider lending Section 18(1) No institution shall grant a loan or credit facility to its associate , or to an officer or member of staff of the institution , or their associates, in excess of such limits as the Central Bank may, by regulations, prescribe. Section 18(2) Any person who contravenes the provisions of this section commits an offence and shall be liable, on conviction, to a fine not exceeding one hundred thousand shillings, or to imprisonment for a term not exceeding three years, or to both. [Act No. 4 of 2012 , s. 55.]

Section 18Verify source

§ 19PROVISIONS RELATING TO GOVERNANCE - 19. Limit on sharesOffence

Limits shareholdings in an institution (max 25%), restricts transfers over 10% without Central Bank approval, requires disclosure of ultimate beneficial owners, and makes contravention an offence with specified penalties.

Section 19. Limit on shares Section 19(1) Subject to subsections (2) and (3) , no person shall hold, directly or indirectly, or otherwise have a beneficial interest in, more than twenty-five per cent of the shares of an institution . Section 19(2)(a) comply with the requirements of subsection (1) within four years of the business being licensed; and Section 19(2)(b) present a plan of action for the reduction of the shareholding at the time the application for the initial licence of the business is made. Section 19(3)(a) a wholly-owned subsidiary of a bank or a financial institution ; Section 19(3)(b) any other company which the Cabinet Secretary may, on the recommendation of the Central Bank , specify. Section 19(4) No person shall transfer, or cause to be transferred, more than ten per cent of the shares of an institution except with the prior approval of the Central Bank . Section 19(5) Where any share is held by a company or other corporate body, or by a nominee on behalf of another person, the company or other corporate body, or the nominee, as the case may be, shall disclose to the Central Bank the full particulars of the individual person who is the ultimate beneficial owner of the shares. Section 19(6) A person who contravenes any of the provisions of this section commits an offence and shall be liable, on conviction, to a fine not exceeding fifty thousand shillings, or to imprisonment for a term not exceeding two years, or to both. [Act No. 4 of 2012 , s. 56.]

Section 19Verify source

§ 20PROVISIONS RELATING TO GOVERNANCE - 20. Management of institutionsProvision

Institutions must be managed by a Board of Directors of at least five Directors; the Board must elect a non‑executive Chairperson and may delegate powers in writing.

Section 20. Management of institutions Section 20(1) Every institution shall be managed by a Board of Directors consisting of not less than five Directors. Section 20(2)(a) is approved by the Central Bank for that purpose; and Section 20(2)(b) is not disqualified from holding office as such under this Act. Section 20(3) The Board of Directors shall elect a non-executive Chairperson from amongst their number. Section 20(4) The Board of Directors may, in writing, delegate, any of the powers to the Board to any Director or to any other officer of the institution .

Section 20Verify source

§ 21PROVISIONS RELATING TO GOVERNANCE - 21. Disqualifications of DirectorsProvision

Directors are disqualified if they are a minor or are under a legal disability.

Section 21. Disqualifications of Directors Section is a minor or is under a legal disability;

Section 21Verify source

§ 22PROVISIONS RELATING TO GOVERNANCE - 22. Disqualifications of officersOffence

Persons who continue to act as officers after being disqualified commit an offence; the section lists grounds for disqualification including undischarged bankruptcy, entering into a composition or scheme of arrangement with creditors, conviction for fraud or dishonesty, or removal from office.

Section 22. Disqualifications of officers Section 22(1)(a) an undischarged bankrupt or enters into a composition or scheme of arrangement with his creditors; Section 22(1)(b) convicted of an offence involving fraud or dishonesty; or Section 22(1)(c) removed from office under the provisions of this Act. Section 22(2) Any person who continues to act as an officer after being disqualified under this section commits an offence.

Section 22Verify source

§ 22APROVISIONS RELATING TO GOVERNANCE - 22A. Assessment of officersProvision

The Central Bank may assess persons managing or controlling institutions for professional and moral suitability; if satisfied it must certify in writing, and those not certified are disqualified and cease to hold office.

Section 22A. Assessment of officers Section 22A(1) Notwithstanding any other provision of this Act, the Central Bank may, from time to time, where it deems it necessary to do so, carry out an assessment of the professional and moral suitability of a person managing or controlling an institution . Section 22A(2) An assessment under this section shall be in accordance with such criteria as may be prescribed. Section 22A(3) Where, upon an assessment under this section, the Central Bank is satisfied as to the professional and moral suitability of the person managing or controlling an institution , it shall so certify in writing to the institution . Section 22A(4) A person who, upon an assessment under this section, is not certified by the Central Bank as fit and proper to manage or control an institution , shall be deemed to be disqualified from holding office and shall cease to hold office. [Act No. 4 of 2012 , s. 58.]

Section 22AVerify source

§ 23PROVISIONS RELATING TO GOVERNANCE - 23. Financial yearProvision

An institution's financial year is the twelve-month period ending on 31 December each year.

Section 23. Financial year Section The financial year of an institution shall be the period of twelve months ending on the 31st day of December in each year.

Section 23Verify source

§ 24PROVISIONS RELATING TO GOVERNANCE - 24. Form of accountsProvision

Accounts and entries kept by an institution must be recorded in English and using the system of numerals employed in government accounts; accounts must show a true and fair state of affairs and explain transactions and financial positions to enable the Central Bank to determine whether the institution has complied with the Act.

Section 24. Form of accounts Section 24(1) All entries in any books of accounts and all accounts kept by an institution shall be recorded in the English language and in the system of numerals employed in government accounts. Section 24(2)(a) show a true and fair state of affairs; Section 24(2)(b) explain all transactions and financial positions to enable the Central Bank determine whether the institution has complied with the provisions of this Act.

Section 24Verify source

§ 25PROVISIONS RELATING TO GOVERNANCE - 25. Accounts to be denominated in shillingsProvision

Accounts must be denominated in shillings.

Section 25. Accounts to be denominated in shillings Section the Companies Act ( Cap. 486 );

Section 25Verify source

§ 26PROVISIONS RELATING TO GOVERNANCE - 26. Submission of accounts to theCentral BankOffence

Section 26 requires submission of an audited balance sheet, audited profit and loss account and a copy of the auditor’s report; contravention is an offence.

Section 26. Submission of accounts to theCentral Bank Section 26(1)(a) an audited balance sheet, showing its assets and liabilities; Section 26(1)(b) an audited profit and loss account; and Section 26(1)(c) a copy of the auditor’s report. Section 26(2) Any person who contravenes the provisions of this section commits an offence.

Section 26Verify source

§ 27PROVISIONS RELATING TO GOVERNANCE - 27. Disclosures in financial statementsProvision

Require disclosure of persons who hold more than twenty-five per cent of the total shares of the institution.

Section 27. Disclosures in financial statements Section the persons, if any, who hold more than twenty-five per cent of the total shares of the institution ;

Section 27Verify source

§ 28PROVISIONS RELATING TO GOVERNANCE - 28. Appointment of internal auditorProvision

Section 28. Appointment of internal auditor Section 28(1) Every institution shall appoint an internal auditor who shall report to the Board of Directors on the financial matters of the institution . Section 28(2) No person shall be appointed as an internal auditor under this section unless the person holds such professional qualifications in accounting and has such experience in deposit-taking microfinance business , as may be prescribed.

Section 28Verify source

§ 29PROVISIONS RELATING TO GOVERNANCE - 29. Appointment of external auditorOffence

Institutions must annually appoint an external auditor qualified under section 30 and approved by the Central Bank; the auditor must audit accounts, report to the Central Bank and Board, and submit an audit report not less than four months after year end; institutions may not change auditors without Central Bank approval; the Central Bank may hold trilateral meetings and may remove and replace auditors for non-compliance.

Section 29. Appointment of external auditor Section 29(1) An institution shall, in each year, appoint an external auditor who shall be a person qualified under section 30 and approved for appointment as such by the Central Bank. Section 29(2) The external auditor shall audit the accounts of the institution and shall make a report on the annual balance sheet and profit and loss account to be submitted to the Central Bank . Section 29(3) An institution shall not remove or change its external auditor except with the prior approval of the Central Bank . Section 29(4) An external auditor shall make a report to the Board of Directors identifying key concerns with respect to the financial condition of the business. Section 29(5) An external auditor shall, not less than four months after the end of each financial year, submit an audit report to the Central Bank , on the financial condition of the business. Section 29(6)(a) solvency of the business; Section 29(6)(b) any violation of prudential standards or a condition imposed on the licence; and Section 29(6)(c) any other contravention of this Act. Section 29(7)(a) to submit such additional information in relation to his audit as the Central Bank may consider necessary; Section 29(7)(b) to carry out any other special investigation; and Section 29(7)(c) to submit a report on any of the matters referred to in paragraphs (a) and (b) above, Section 29(8)(a) there has been a serious breach of or non-compliance with the provisions of this Act, the Central Bank of Kenya Act or the regulations, guidelines or other matters prescribed by the Central Bank ; Section 29(8)(b) a criminal offence involving fraud or other dishonesty has been committed by the institution or any of its officers or employees; Section 29(8)(c) losses have been incurred which reduce the core capital of the institution by fifty per cent or more; Section 29(8)(d) serious irregularities have occurred which may jeopardize the security of depositors or creditors of the institution ; or Section 29(8)(e) he is unable to confirm that the claims of depositors and creditors of the institution are capable of being met out of the assets of the institution , Section 29(9) The Central Bank may arrange trilateral meetings with an institution and its auditor from time to time, to discuss matters relevant to the Central, Bank's supervisory responsibilities which have arisen in the course of the statutory audit of the institution including relevant aspects of the institution 's business, its accounting and control system and its annual accounts. Section 29(10) If an external auditor of an institution fails to comply with the requirements of this Act, the Central Bank may remove him from office and appoint another person in his place. [Act No. 41 of 2013 , s. 4.]

Section 29Verify source

§ 30PROVISIONS RELATING TO GOVERNANCE - 30. Qualifications of an external auditorProvision

States that a person "is qualified as an auditor under the Companies Act ( Cap. 486 )".

Section 30. Qualifications of an external auditor Section is qualified as an auditor under the Companies Act ( Cap. 486 ); and

Section 30Verify source

§ 31PROVISIONS RELATING TO GOVERNANCE - 31. Exhibition and publication of audited accountsOffence

Institutions must display their last audited financial statements year-round in each office and branch, and must publish the balance sheet and profit and loss account in a national newspaper within four months after each financial year; non-compliance may attract a prescribed penalty of not less than 100,000 shillings payable to the Central Bank.

Section 31. Exhibition and publication of audited accounts Section 31(1) An institution shall exhibit, throughout the year, in a conspicuous position in every office and branch , a copy of its last audited financial statements and shall, within four months of the end of each financial year, cause a copy of the balance sheet and profit and loss account for that year to be published in a national newspaper, in such form as the Central Bank may prescribe. Section 31(2) An institution that does not comply with the provisions of this section shall be liable to pay to the Central Bank such penalty, not being less than one hundred thousand shillings, as may be prescribed.

Section 31Verify source

§ 32PROVISIONS RELATING TO GOVERNANCE - 32. Rectification of audited accountsAmendment

Requires amendment of the audited accounts to comply with the Act.

Section 32. Rectification of audited accounts Section amend the audited accounts to comply with the Act;

Section 32Verify source

§ 33PROVISIONS RELATING TO GOVERNANCE - 33. Collection and furnishing of information by theCentral BankProvision

Central Bank must collect data and may require institutions to submit returns or furnish information; Cabinet Secretary may require information from the Central Bank or institutions.

Section 33. Collection and furnishing of information by theCentral Bank Section 33(1) The Central Bank shall collect such data and other information as may be necessary to enable it maintain supervision and surveillance of the affairs of an institution and its agencies and the protection of depositors and, for that purpose, the Central Bank may require an institution and its agencies to submit statistical and other returns on a periodic basis in addition to any other returns required by law. Section 33(2) The Central Bank may require any institution and its agencies to furnish it with such information as it may reasonably require for the proper discharge of its functions under this Act. Section 33(3) The information required to be furnished under subsection (2) may include information relating to any company which is an affiliate, an associate or a holding company of the institution and its agencies required to furnish information under that subsection. Section 33(4) The Cabinet Secretary may require the Central Bank or an institution and its agencies to furnish to the Cabinet Secretary , at such time and in such manner the Cabinet Secretary may direct, such information as the Cabinet Secretary may require for the proper discharge of his functions under this Act. [Act No. 10 of 2010 , s. 85.]

Section 33Verify source

§ 34PROVISIONS RELATING TO GOVERNANCE - 34. Publication of informationProvision

Section 34 sets rules on publishing and sharing information: the Cabinet Secretary may publish information furnished under the Act; persons who obtain information through performing duties generally must not disclose it; specified bodies must exchange loan-performance information as regulated; the Central Bank may disclose information to specified authorities (including cross‑border where reciprocal arrangements exist).

Section 34. Publication of information Section 34(1) Subject to subsection (2) , the Cabinet Secretary may publish in the Gazette , in whole or in part, any information furnished to him or to the Central Bank under this Act. Section 34(2) No information shall be published under subsection (1) if it would disclose the financial affairs of any person, except with the prior consent, in writing, of that person. Section 34(3) Except as provided in this Act, no person shall disclose or publish any information which comes into his possession as a result of the performance of his duties under this Act. Section 34(3A) The Deposit Protection Fund Board , institutions licensed under this Act and institutions licensed under the Banking Act ( Cap. 488 ) shall, in the ordinary course of business and in such manner and to such extent as the Cabinet Secretary may, in regulations, prescribe, exchange such information on performing and non performing loans as may, from time to time, be specified by the Central Bank in regulation. Section 34(4) The Central Bank institutions licensed under this Act and institutions licensed under the Banking Act ( Cap. 488 ) may, in the ordinary course of business, in such manner and to such extent as the Cabinet Secretary may, in regulations, prescribe, exchange such other information as is reasonably required for the proper discharge of their functions. Section 34(5) Without prejudice to the provisions of subsection (4) , regulations under that subsection may provide for the establishment and operation of credit reference bureaus for the purpose of collecting prescribed credit information on clients of institutions licensed under this Act and institutions licensed under the Banking Act ( Cap. 488 ), and disseminating the information among such institutions for use in the ordinary course of business, subject to such conditions or limitations as may be prescribed. Section 34(6) Notwithstanding the provisions of this section, the Central Bank may disclose any information referred to in subsection (3) to the Deposit Protection Fund Board , any monetary authority or financial regulatory authority, fiscal or tax agency , fraud investigations agency within or outside Kenya, where such information is reasonably required for the proper discharge of the functions of the Central Bank or the requesting Deposit Protection Fund Board , monetary authority or financial regulatory authority, fiscal or tax agency , fraud investigations agency : Provided that the sharing of information with institutions outside Kenya shall only apply where there is a reciprocal arrangement. Section 34(7)(a) the Central Bank ; Section 34(7)(b) the Deposit Protection Fund Board ; Section 34(7)(c) an institution licensed under this Act or the Banking Act ( Cap. 488 ); Section 34(7)(d) a credit reference bureau established under subsection (5) ; Section 34(7)(e) any person carrying out an inspection under section 35 ; or Section 34(7)(f) any person, authority, agency or entity referred to in subsection (6) or any other person or authority which may be authorized under any written law or otherwise to share information,

Section 34Verify source

Part IV

SUPERVISION BY CENTRAL BANK

§ 35SUPERVISION BY CENTRAL BANK - 35. Inspection of institutionsOffence

The Central Bank may (and must if directed by the Cabinet Secretary) order inspections; when an inspection occurs the institution, its agencies and their officers and employees must produce requested books, records and information within a specified period; failure to do so is an offence.

Section 35. Inspection of institutions Section 35(1) The Central Bank may, at any time, and shall, if so directed by the Cabinet Secretary , cause an inspection of an institution and its agencies to be made by any person authorized by the Central Bank in writing. Section 35(2) When an inspection is made, the institution concerned or agency and every officer or employee thereof shall produce and make available to the person making the inspection, all the books, accounts, records and other documents of the deposit-taking business and such correspondence, statements and information relating to the business as the person making the inspection may require, within such period as he may direct in writing. Section 35(3) A person who fails to produce any books, accounts, records, documents, correspondence, statements or other information required under subsection (2) , within the period specified in the relevant direction, commits an offence. Section 35(4)(a) any breach or contravention of this Act and any regulations made thereunder; Section 35(4)(b) any irregularity in the manner of conduct of the inspected institution ; Section 35(4)(c) any mismanagement of the institution ; and Section 35(4)(d) any other matter relating to the institution not consistent with sound business practice. [Act No. 10 of 2010 , s. 86.]

Section 35Verify source

§ 36SUPERVISION BY CENTRAL BANK - 36. Periodic returnsProvision

The Central Bank may require an institution to provide periodic reports about its business operations in a form the Central Bank prescribes.

Section 36. Periodic returns Section 36(1) The Central Bank may require an institution to furnish it with periodic reports of its business operations in such form as the Central Bank may prescribe. Section 36(2)(a) compliance by the institution with the prescribed capital requirements; Section 36(2)(b) the composition and quality of assets and liabilities; Section 36(2)(c) the quality of its earning assets; Section 36(2)(d) the adequacy and performance of its management; Section 36(2)(e) any other matter which, in the opinion of the Central Bank , is relevant to the discharge of its supervisory role under this Act.

Section 36Verify source

§ 36ASUPERVISION BY CENTRAL BANK - 36A. Powers upon audit or inspection reportProvision

Allows restriction, suspension or prohibition of an institution's payment of dividends.

Section 36A. Powers upon audit or inspection report Section restrict, suspend or prohibit the payment of dividends by the institution;

Section 36AVerify source

§ 36BSUPERVISION BY CENTRAL BANK - 36B. Powers on anti-money laundering, combating the financing of terrorism and countering proliferation financing mattersProvision

The Central Bank must regulate, supervise and enforce anti-money laundering, terrorism financing and proliferation financing compliance for reporting institutions; it has specific supervisory powers including vetting key persons, inspections, surveillance, requiring documents, imposing sanctions, issuing rules and sharing information.

Section 36B. Powers on anti-money laundering, combating the financing of terrorism and countering proliferation financing matters Section 36B(1) Pursuant to sections 2A , 36A , 36B and 36C of the Proceeds of Crime and Anti-Money Laundering Act ( Cap. 59A ), the Central Bank shall regulate, supervise and enforce compliance for anti-money laundering, combating the financing of terrorism and countering proliferation financing purposes by all reporting institutions regulated and supervised by the Central Bank and to whom the provisions of the Proceeds of Crime and Anti-Money Laundering Act ( Cap. 59A ) apply. Section 36B(2)(a) vet proposed significant shareholders, proposed beneficial owners, proposed directors and senior officers of a reporting institution ; Section 36B(2)(b) conduct onsite inspection; Section 36B(2)(c) conduct offsite surveillance; Section 36B(2)(d) undertake consolidated supervision of an institution and its group; Section 36B(2)(e) compel the production of any document or information the Central Bank may require for the purpose of discharging its supervisory mandate under the Proceeds of Crime and Anti-Money Laundering Act ( Cap. 59A ); Section 36B(2)(f) impose monetary, civil or administrative sanctions for violations related to anti-money laundering, combating the financing of terrorism and countering proliferation financing purposes; Section 36B(2)(g) issue regulations, guidelines, directions, rules or instructions for anti-money laundering, combating the financing of terrorism and countering proliferation financing purposes; Section 36B(2)(h) cooperate and share information for anti-money laundering, combating the financing of terrorism and countering proliferation financing purposes; and Section 36B(2)(i) take such action as is necessary to supervise and enforce compliance by reporting institutions in line with the provisions of the Proceeds of Crime and Anti-Money Laundering Act ( Cap. 59A ) and any regulations, guidelines, rules, instruction or direction made or issued thereunder.

Section 36BVerify source

§ 36CSUPERVISION BY CENTRAL BANK - 36C. Penalties for violations relating to money laundering, terrorism financingOffence

Certain persons (institutions, directors, officers, employers, agents or any other person) must not violate or fail to comply with the Proceeds of Crime and Anti-Money Laundering Act or related instruments; penalties include up to five million shillings for legal persons, up to one million shillings for natural persons, and additional penalties up to one hundred thousand shillings per day while the non-compliance continues.

Section 36C. Penalties for violations relating to money laundering, terrorism financing Section 36C(1) No institution , director, officer , employer, agent or any other person shall violate or fail to comply with any provision of the Proceeds of Crime and Anti-Money Laundering Act ( Cap. 59A ), or any regulation, guideline, rule, direction or instruction issued under the said Act or under this section. Section 36C(2)(a) in case of a legal person, to a penalty not exceeding five million shillings; Section 36C(2)(b) in the case of a natural person, to a penalty not exceeding one million shillings; and Section 36C(2)(c) to additional penalties not exceeding one hundred thousand shillings in each case for each day or part thereof during which such violation or non-compliance continues.

Section 36CVerify source

§ 37SUPERVISION BY CENTRAL BANK - 37. Power of Central Bank to intervene in managementOffence

The Central Bank must issue a notice specifying defaults and require remedial action before intervening in an institution's affairs; a person appointed to manage an institution shall hold office for no more than six months (subject to possible extension by the High Court).

Section 37. Power of Central Bank to intervene in management Section 37(1)(a) the institution has contravened the provisions of this Act or the conditions upon which its licence was granted; Section 37(1)(b) the business of the institution is being conducted in a manner detrimental to the interests of its depositors or creditors; Section 37(1)(c) the institution has failed to maintain the prescribed minimum core capital; Section 37(1)(d) the institution has insufficient assets to cover its liabilities; Section 37(1)(e) if the institution is significantly undercapitalized; or Section 37(1)(f) if an institution fails to submit a capital restoration plan or a plan to resolve all deficiencies as directed under section 36B or to add more capital and the institution fails, refuses or neglects to comply with the order or to implement a plan of correction. Section 37(2) The Central Bank shall, before intervening in the affairs of an institution under subsection (1) , issue the institution with a notice specifying the defaults noted in the conduct of the business and require the institution to take remedial action within such reasonable period as may be specified in the notice in order to comply with this Act. Section 37(3)(a) direct the institution to take such steps as the Central Bank may consider necessary to rectify the default; Section 37(3)(b) prohibit the receipt of any fresh deposits or limit lending operations; Section 37(3)(c) remove any officer or employee of an institution who, in the opinion of the Central Bank, has caused or contributed to any contravention of any provision of this Act or any regulations or guidelines made thereunder, or to any deterioration in the financial stability of the institution, or has been guilty of conduct detrimental to the interests of depositors or other creditors of the institution; Section 37(3)(d) prohibit any declaration of dividends; Section 37(3)(e) impose on any member of the management responsible for the default such penalty as may be prescribed; or Section 37(3)(f) close the institution and revoke its licence; Section 37(3)(g) impose any restriction or condition it may consider necessary on any arrangement between the institution and its agencies; or Section 37(3)(h) direct the institution to terminate any agency arrangement. Section 37(4)(a) appoint a person to manage the affairs of the institution and to exercise all the powers of the institution to the exclusion of the Board of Directors, including the use of the corporate seal of the institution; Section 37(4)(b) appoint a competent person familiar with deposit-taking business to its Board of Directors, to hold office as a Director for a period not exceeding twelve months, who shall not be removed from office except with the prior approval of the Central Bank; Section 37(4)(c) by notice in the Gazette , revoke or cancel any existing power of attorney, mandate, appointment or other authority by an institution in favour of any officer or employee or any other person; and Section 37(4)(d) enter into an agreement with the board of directors of an institution requiring the institution to rectify its deficiencies within three months: Section 37(5) A person appointed to manage an institution under this section shall hold Office for a period not exceeding six months but the High Court may, on the application of the Central Bank, extend such period as it may deem necessary. [Act No. 10 of 2010 , s. 87, Act No. 41 of 2013 , s. 7.]

Section 37Verify source

Part V

PROTECTION OF DEPOSITS

§ 38PROTECTION OF DEPOSITS - 38. Liquidation of aninstitutionby theCentral BankCommencement

If an institution is insolvent, the Central Bank may appoint the Deposit Protection Fund Board as liquidator; the Board is subject to High Court supervision; no receiver or manager may be appointed without prior High Court approval; the High Court must not grant that approval unless the Central Bank certifies it will not exercise its powers.

Section 38. Liquidation of aninstitutionby theCentral Bank Section 38(1) Where an institution becomes insolvent, the Central Bank may appoint the Deposit Protection Fund Board to be a liquidator of the institution and the appointment shall have the same effect as the appointment of a liquidator by the High Court under the provisions of the Companies Act ( Cap. 486 ). Section 38(2) Any reference in the Companies Act ( Cap. 486 ) to the “relevant date” and “commencement of the winding-up” shall be deemed to be a reference to the date on which the Deposit Protection Fund Board is appointed as liquidator. Section 38(3)(a) it is unable to pay its debts within the meaning of the Companies Act ( Cap. 486 ); Section 38(3)(b) a winding-up order is made against the institution or a resolution of creditors to voluntarily wind up the business is passed under the Companies Act ( Cap. 486 ); Section 38(3)(c) the institution is unable to pay sums due and payable to its depositors; or Section 38(3)(d) the Central Bank determines that the value of the assets of an institution is less than the amount of its liabilities. Section 38(4) In exercising its functions under this section, the Deposit Protection Fund Board shall be subject to the supervision of the High Court which may, upon the application of an interested party, or where the High Court deems it fit, appoint a committee of inspection which shall have the same powers as a committee of inspection appointed under the Companies Act ( Cap. 486 ). Section 38(5) No person shall be appointed a receiver or manager of an institution without the prior approval of the High Court. Section 38(6) The High Court shall not grant an approval under subsection (5) unless the Central Bank certifies that it does not intend to exercise its powers under this section. Section 38(7) Where a receiver or a manager of an institution has been appointed and a manager or liquidator is appointed under the provisions of this Part, the powers of the receiver or manager may only be exercised to the extent authorized by the Central Bank or the High Court.

Section 38Verify source

§ 39PROTECTION OF DEPOSITS - 39. Contributions to the Deposit ProtectionFundOffence

All institutions must contribute to the Deposit Protection Fund; the Board prescribes amounts and timing and may increase contributions if an institution's affairs are detrimental; late or non-contributing institutions must pay penalty interest up to one-half per cent of the unpaid amount per day; the Board must publish an annual list of protected institutions in the Gazette.

Section 39. Contributions to the Deposit ProtectionFund Section 39(1) All institutions shall contribute to the Deposit Protection Fund . Section 39(2) An institution shall pay into the Deposit Protection Fund , such annual amount and at such times as the Deposit Protection Fund Board may prescribe. Section 39(3) Notwithstanding subsection (2) , where it appears to the Deposit Protection Fund Board that the affairs of an institution are being conducted in a manner detrimental to the interests of the deposit-taking business or of the depositors of the institution , the Deposit Protection Fund Board may increase the contributions of that institution beyond the prescribed maximum. Section 39(4) An institution that does not contribute to the Deposit Protection Fund within the period prescribed under subsection (2) shall be liable to pay to the Fund a penalty interest charge, not exceeding one-half per cent of the unpaid amount, for every day during which the amount remains unpaid. Section 39(5) The Deposit Protection Fund Board shall cause a list of all institutions whose deposits are protected to be published in the Gazette annually.

Section 39Verify source

§ 40PROTECTION OF DEPOSITS - 40. Protection of depositsProvision

The Deposit Protection Fund Board must determine protected deposit amounts by order in the Gazette; customers may lodge claims on institution insolvency; the Board may require proof, decline payments in certain cases, require the Central Bank to inspect, and is entitled to recover amounts from institutions or liquidators.

Section 40. Protection of deposits Section 40(1) The Deposit Protection Fund Board shall, by order in the Gazette , determine the amount of the balance to be maintained by a customer of an institution , as a protected deposit . Section 40(2) A customer of an institution may, upon the institution becoming insolvent, lodge a claim with the Deposit Protection Fund Board , in such form as the Deposit Protection Fund Board may approve, for payment to the customer out of the Fund of any protected deposit which the customer would, but for the insolvency, have been paid had the customer demanded payment from the insolvent institution . Section 40(3) The Deposit Protection Fund Board may, before paying any claim lodged under subsection (2) , require the claimant to furnish such documentary proof as may be proper to show that the customer is entitled to payment out of the Fund . Section 40(4) The Deposit Protection Fund Board may decline to make any payment under this section to a person who in its opinion, had any responsibility for or may have profited directly or indirectly from the circumstances leading to the institution becoming insolvent. Section 40(5) The Deposit Protection Fund Board may require the Central Bank to carry out an inspection to ascertain the type, number and value of the protected deposits of any institution and the information obtained pursuant to the inspection shall, be made available to the Deposit Protection Fund Board . Section 40(6) Upon payment of a protected deposit , the Deposit Protection Fund Board shall be entitled to receive from an institution or its liquidator, an amount equal to the insolvency payment paid by the Fund on account of its subrogation to the claims of any customer or depositor.

Section 40Verify source

§ 41PROTECTION OF DEPOSITS - 41. Rights of Board on insolvencyProvision

The Deposit Protection Fund Board is entitled to receive notices/documents sent to a creditor, and its authorized representative is entitled to attend meetings of the institution's creditors.

Section 41. Rights of Board on insolvency Section Whenever an institution is closed or becomes insolvent, the Deposit Protection Fund Board shall be entitled to receive any notice or other document required to be sent to a creditor of the institution , and a duly authorized representative of the Deposit Protection Fund Board shall be entitled to attend any meeting of creditors of the institution .

Section 41Verify source

§ 42PROTECTION OF DEPOSITS - 42. Right of assignmentProvision

A liquidator may assign an institution's or a customer's assets or liabilities to third parties for the benefit of the institution's creditors and depositors.

Section 42. Right of assignment Section 42(1) A liquidator may assign the assets or liabilities of an institution or of a customer under this Act, or the Companies Act ( Cap. 486 ) or under any other written law to third parties for the benefit of the creditors and depositors of the institution under liquidation. Section 42(2) The right of assignment conferred by this section shall override all other rights and interests of parties under contracts of employment, leases, charges, mortgages or any other agreements the institution may have entered into before going into liquidation.

Section 42Verify source

Part VI

MISCELLANEOUS PROVISIONS

§ 43MISCELLANEOUS PROVISIONS - 43. Declaration of holidaysProvision

The Cabinet Secretary may, by notice in the Gazette, declare a non-public-holiday day to be a holiday for all institutions or a particular institution, and those institutions shall remain closed on that day.

Section 43. Declaration of holidays Section Where the Cabinet Secretary considers that it is in the public interest that all institutions, or a particular institution should remain closed on a day which is not a public holiday, the Cabinet Secretary may, by notice in the Gazette , declare that day to be a holiday for all institutions or for the particular institution , and all institutions or the particular institution shall remain closed on that day.

Section 43Verify source

§ 44MISCELLANEOUS PROVISIONS - 44. Orders by the High CourtCommencement

Section 44 authorises the High Court to order that an institution be prohibited from carrying on business or that the commencement or continuance of actions or proceedings against the institution be stayed for a specified period on terms the Court considers reasonable, and the Court may extend that stay up to a total of six months; an order under subsection (1)(a) causes a licence granted under the Act to be deemed suspended.

Section 44. Orders by the High Court Section 44(1)(a) prohibiting the institution from carrying on business; or Section 44(1)(b) staying the commencement or continuance of any action or any proceedings against the institution for a specified period of time on such terms and conditions as the High Court considers reasonable and may extend the specified period up to a total of six months from the beginning of the stay. Section 44(2) Where an order is made under subsection (1)(a) , a licence granted under this Act shall be deemed to be suspended.

Section 44Verify source

§ 45MISCELLANEOUS PROVISIONS - 45. Restriction on use of words “deposit-taking microfinance business”Offence

Only licensed persons may use the term "deposit-taking microfinance business"; companies registered as microfinance banks must stop using "microfinance bank" in their name if they do not obtain a licence within one year; contravention is an offence.

Section 45. Restriction on use of words “deposit-taking microfinance business” Section 45(1) No person shall use the word “ deposit-taking microfinance business ” or any of its derivatives or any other words indicating the transaction of deposit-taking business or the equivalent, in the name, description or title under which it transacts business in Kenya or make any representation that the person transacts deposit-taking business unless such person is licensed under this Act. Section 45(2) Where a company registered under the Companies Act ( Cap. 486 ) as a microfinance bank fails to acquire a licence to operate under this Act within a period of one year from the date of such registration, the company shall forthwith cease the use of the words " microfinance bank " in its name. Section 45(3) Any person who contravenes the provisions of this section commits an offence. [Act No. 4 of 2012 , s. 60, Act No. 41 of 2013 , s. 8.]

Section 45Verify source

§ 46MISCELLANEOUS PROVISIONS - 46. Default by officers or employeesProvision

Officers or employees must take all reasonable steps to secure the institution's compliance with this Act.

Section 46. Default by officers or employees Section take all reasonable steps to secure the compliance of the institution with this Act;

Section 46Verify source

§ 47MISCELLANEOUS PROVISIONS - 47. General penaltyOffence

A person who commits an offence under this Act for which no penalty is stipulated shall be liable, on conviction, to a fine not exceeding one hundred thousand shillings, or to imprisonment for a term not exceeding one year, or to both.

Section 47. General penalty Section A person who commits an offence under this Act for which no penalty is stipulated shall be liable, on conviction, to a fine not exceeding one hundred thousand shillings, or to imprisonment for a term not exceeding one year, or to both.

Section 47Verify source

§ 47AMISCELLANEOUS PROVISIONS - 47A. Rights and fundamental freedomsProvision

All persons subject to this Act are entitled to enjoy all rights and fundamental freedoms in the Constitution, except where limited by Article 24, this Act or any other Act.

Section 47A. Rights and fundamental freedoms Section All persons subject to this Act shall enjoy all rights and fundamental freedoms enshrined in the Constitution unless limited to the extent specified in Article 24 of the Constitution, this Act or any other Act. [Act No. 10 of 2023 , Sch.]

Section 47AVerify source

§ 47BMISCELLANEOUS PROVISIONS - 47B. Limitation of right to privacyProvision

The statutory right to privacy is limited as specified, allowing searches, seizures, disclosure of certain private information, and interference with communications where provided for.

Section 47B. Limitation of right to privacy Section 47B(1) The right to privacy guaranteed under Article 31 of the Constitution is hereby limited under Article 24 of the Constitution only to the nature and extent contemplated under subsection (2) . Section 47B(2)(a) the person’s home or property may, with a warrant, be searched; Section 47B(2)(b) the person’s possessions may be seized; Section 47B(2)(c) information relating to that person’s financial, family or private affairs where required may be revealed; or Section 47B(2)(d) the privacy of a person’s communications may be investigated or otherwise interfered with. Section 47B(3) A limitation of a right under subsection (1) shall apply only for the purpose of the prevention, detection, investigation and prosecution of proceeds of crime, money laundering and financing of terrorism. [Act No. 10 of 2023 , Sch.]

Section 47BVerify source

§ 48MISCELLANEOUS PROVISIONS - 48. RegulationsOffence

The Central Bank may make regulations with the approval of the Cabinet Secretary; the Cabinet Secretary may make regulations on the Central Bank's recommendation and may prescribe penalties (limits specified) for failure to comply with Central Bank directions.

Section 48. Regulations Section 48(1) The Central Bank may, with the approval of the Cabinet Secretary , make regulations for prescribing anything which under this Act may be prescribed by the Central Bank . Section 48(2) Subject to this Act, the Cabinet Secretary may, on the recommendation of the Central Bank , make regulations generally for the better carrying out of the provisions of this Act. Section 48(2A)(a) the standards to be adhered to in the conduct of their business in Kenya or in countries where their branches or subsidiaries are located; Section 48(2A)(b) guidelines to be adhered to by institutions in order to maintain a stable and efficient deposit taking microfinance system. Section 48(3) Without prejudice to the generality of subsection (2) , the Cabinet Secretary may, in regulations, prescribe penalties to be paid by institutions which fail or refuse to comply with any directions of the Central Bank under this Act, which shall not exceed one million shillings in the case of an institution , or one hundred thousand shillings in the case of a natural person, and may prescribe additional penalties not exceeding ten thousand shillings in each case for each day or part thereof during which such failure or refusal continues. [Act No. 8 of 2009 , s. 73.]

Section 48Verify source

§ 52MISCELLANEOUS PROVISIONS - 52. False advertisingAmendment

The Central Bank may direct an institution at any time to withdraw, amend or refrain from issuing any document covered by subsection (1).

Section 52. False advertising Section 52(1)(a) falsely represents that the entity, institution or person is authorized to accept deposits or is otherwise licensed under the provisions of this Act; or Section 52(1)(b) is issued contrary to any direction given by the Central Bank under the provisions of subsection (2) , Section 52(2) The Central Bank may, at any time, direct an institution to withdraw, amend or refrain from issuing any document to which subsection (1) applies. [Act No. 4 of 2012 , s. 61.]

Section 52Verify source

§ 53MISCELLANEOUS PROVISIONS - 53. Consumer protectionOffence

Non-deposit-taking microfinance businesses must comply with Article 31 and the Data Protection Act when lending and recovering debts, and must not collect interest or charges unless those are prescribed in an agreement with the borrower.

Section 53. Consumer protection Section 53(1)(a) furnish borrowers with accurate information on the procedure and conditions for lending and recovery; Section 53(1)(b) inform borrowers, prior to the acquisition of a loan, of the financial costs associated with the procurement and servicing of that micro-loan to be met by the borrower; Section 53(1)(c) maintain confidentiality of information relating to borrowers; and Section 53(1)(d) inform borrowers of the rights and duties associated with the acquisition of loans. Section 53(2)(a) not harass, abuse or oppress a borrower, guarantor or any person in connection with collection or recovery of a debt; Section 53(2)(b) not threaten or use violence or illegal means in collection or recovery of a debt; or Section 53(2)(c) not use obscene or profane language to a borrower, guarantor or any person in connection with collection or recovery of a debt. Section 53(3) A non-deposit taking microfinance business shall comply with the requirements of Article 31 of the Constitution and the Data Protection Act in lending loans and recovery of debts. Section 53(4) A non-deposit-taking microfinance business shall not collect interest, fees, charges, penalties, levies or expenses unless such interest, fees, charges, penalties, levies or expenses are prescribed in an agreement between the non-deposit taking microfinance business and the borrower. [Act No. 20 of 2024 , s. 19.]

Section 53Verify source

§ 54MISCELLANEOUS PROVISIONS - 54. Transitional provisionCommencement

Persons who were conducting non-deposit-taking microfinance business before commencement must apply for a licence within six months; applicants may continue operating pending determination subject to the Act, Regulations and conditions from the Central Bank; existing licences prior to commencement continue until expiry; contravening this section is an offence punishable by up to 5 years imprisonment or a fine of Kenya Shillings Two million or both.

Section 54. Transitional provision Section 54(1) Within six months of the commencement of this Act, a person who was conducting non-deposit-taking microfinance business before the commencement of this Act shall apply for a license under this Act. Section 54(2) An applicant under subsection (1) may continue to conduct non-deposit-taking microfinance business pending determination of the application subject to this Act, Regulations made under this Act and any conditions issued by the Central Bank. Section 54(3) A license issued to a non-deposit taking microfinance business prior to the commencement of this Act shall continue in force until the expiry of such license. Section 54(4) A person who contravenes the provisions of this section commits an offence and shall be liable upon conviction to imprisonment of a term of not more than 5 years or a fine of Kenya Shillings Two million or both. [Act No. 20 of 2024 , s. 19.]

Section 54Verify source

Legislative relationships

8 referenced instruments

Names are derived from the stored provision headings and citation-enrichment layer. Treat this as a research index and verify each relationship against the source text.

A–F

5 instruments

Article 31 of the Constitution and the Data Protection Act
Section 53
audited accounts to comply with the Act
Section 32
Central Bank under this Act
Section 48
Companies Act
Section 38
Crime and Anti-Money Laundering Act
Section 36C

G–M

1 instrument

Kenya Act
Section 29

N–S

2 instruments

Proceeds of Crime and Anti-Money Laundering Act
Section 36B
such conditions. Section 6(3) A licence issued under this Act
Section 6

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