Connect with us

Banks

Banks Warn of Tougher Measures to Rein in Illegal Cash

News Team

Published

on

In a move aimed at curtailing the country’s underground economy, the Kenya Bankers Association has vowed to tighten control over Sh1,000 notes. This comes as Kenyans have been given until October 1st  by the CBK to surrender the old notes.

The banking lobby warns that it will be hard for people to return illegally earned money that was stored away from circulation, notably the Sh1,000 note. It is the most preferred because of its high value and also because it is the highest denomination of Kenyan money available.

According to Habil Olaka, the KBA chief executive, demonetization of the notes is a move designed to catch those who hide money that is acquired illegally or is undeclared for tax purposes.

“Controls are in place to ensure that the money does not find its way to the formal financial system easily. The system will be checking whether it is from genuine proceeds or crime, which includes corruption,” he said. He also pointed out that property acquisition would not bypass scrutiny.

“Even if you buy cars, whomever you buy from using cash will still have to identify where the money is coming from, so it is not an easy way out,” he said.

Mr. Olaka expressed confidence in the success of the exercise, noting that banks have started initiating stern regulations reinforce their ability to protect themselves and their customers against potential financial crimes.

Five banks that had been fined Sh392.5 million previously for handling money worth billions of shillings that had been stolen from the National Youth Service (NYS) have already taken steps to minimize the risk of recurrence.

The banks; Equity, KCB, DTB, Co-op Bank and Standard Chartered Bank (Kenya) stated in their annual reports that they had put measures in place to shore up their fight against financial crimes.

KCB mentioned that actions have been taken to reacquaint their staff on all the processes and regulations to be followed in the case of suspicious transactions whereas StanChart cited the enhancement of controls around payments and cash received from the government and government-related bodies.

Comment using Facebook

Kenya's most incisive and informative platform to learn about business news, technology, markets, companies, startups, leadership advise, curated business and industry opinion, and affluent lifestyles.

Banks

Sh1,000 Notes Abroad to be Exchanged in the Country, CBK Says

News Team

Published

on

Patrick Njoroge, the Central Bank of Kenya (CBK) Governor, has urged those with the old Sh1,000 notes that are out of the country to exchange them in Kenya before the October 1st deadline elapses.

The Governor dismissed permitting conversion of the old currency outside the country, adding that the CBK had alerted all foreign banks to cease recognition of the old notes.

He further said that banks outside the country will not be receiving any new notes to aid in conversion, contending that this would defeat the process of demonetization.

“If you have the Kenyan currency and you happen to be outside the country, there is only one way to get value for it before October 1. You have to take a trip here and go through the procedures outlined in the Gazette notice and subsequent releases,” said Dr. Njoroge when speaking at a press briefing yesterday.

“You cannot convert it to any other currency out there since this would defeat the process of demonetization.”

Earlier this month, notices were issued from the Bank of Tanzania and the Bank of Uganda discontinuing the conversion of the old currency in their banks. In addition, they have directed their countries’ banks to apply more stringent due diligence processes to all currency flows.

The procedures to be followed for currency conversion by locals will also be followed by those coming into the country.

Dr. Njoroge has warned that measures have been put in place to thwart any efforts to clean illicit money in nations involved in significant financial transactions with Kenya.

After the East African Community allowed free movement of goods and people across member states, the Kenyan shilling is frequently used in business transactions in neighbouring countries.

The result is that this money comes back home through those trade routes and official currency repatriation mechanisms between central banks of countries in the Community.

He also said that the deadline will not be extended, arguing that an extension would create a loophole for those seeking to clean their dirty money to do so.

Comment using Facebook

Continue Reading

Banks

Safaricom and Equity in Deal to Offer Loans to Contractors

News Team

Published

on

Safaricom contractors that may find themselves short on cash will now be able to access as much as Sh200 million in unsecured short-term loans following a deal between the telco and Equity Bank. This will help the contractors to maintain cash flow positions before receiving payment for their services.

The firm wrote a letter addressed to its business partners in which it said that the aim of the deal is the creation of a more procurement-ready business. The main beneficiaries will be Safaricom dealers, suppliers, and agents.

In the fiscal year ended March 2019, Safaricom had 440 dealers, 156,000 M-Pesa agents, and 1,164 suppliers.

“We are pleased to inform you of our partnership with Equity Bank which will offer our partners financing solutions linked to purchase orders and invoices,” said Francis Murabula, Safaricom’s head of supply chain management, in the letter.

He is asking the dealers, suppliers, and agents for consent to share their information including contact details, invoice and purchase order information to enable loan processing for potential firms.

Contractors will be able to borrow from Equity before or after they fulfill their contractual obligations with Safaricom.

The terms and amount of the loan applied for will depend on each company’s credit rating.

Therefore, for a contractor to qualify for an unsecured loan of up to Sh200 million, they have to be using unpaid accounts for goods and services that have already been provided to Safaricom as their collateral.

Comment using Facebook

Continue Reading

Banks

Kenya’s Victoria Bank Appointed to Invest Sh1.5bn in Fin-tech Start-ups

News Team

Published

on

Victoria Commercial Bank (VCB), based in Kenya, has been appointed to oversee the investment of a Dubai-based equity fund’s kitty worth Sh1.5 billion in African and Asian financial technology startups.

This will see 1.7 million customers hailing from several countries including Bangladesh, Kenya, Ghana, Nepal, Tanzania, Sri Lanka, and India benefit from the Nimai Emerging Financial Services Fund (NESF) facility.

“The markets were chosen based on the existing (fintech) presence and experience. It integrates investment expertise with deep operational capability and resources,” said a joint statement.

According to Yogesh Pattni, the VCB chief executive, the deal presents an opportunity for a stronger partnership with Nimai Capital. The latter recently set up a kitty worth Sh1 billion to fund onward lending to enterprises operated by women.

Housing finance, insurance, microfinance, banking, and retail are some of the technology mobility-enabled emerging financial services opportunities that will receive investment from the fund.

Pankaj Mundra, NESF’s co-founder and managing director, expects VCB’s extensive understanding of the Kenyan market and business experience to be of benefit to the fund.

“We look forward to working with Victoria Commercial Bank to source and develop investment opportunities for the Fund across East Africa,” said Mr. Mundra.

The benefits to be enjoyed by investee firms include expert financial advice from line companies, system integration with Indian fintech firms and access to financial services from the diaspora.

“We have a firm belief that the fund will make a significant and positive impact in the lives of millions of families in addition to generating appropriate financial returns for investors,” the statement added.

A proven track record is a condition for start-ups to access funding.

Comment using Facebook

Continue Reading

Trending

Copyright © 2019 INVERSK MAGAZINE. Developed by ITIPS