• October 19th, 2011
  • Posted by athanne

The Central Bank Of Kenya

300x250 animated The Central Bank Of Kenya

The Central Bank Of Kenya (CBK) is The Central Bank Of Kenya that is located in the capital city  Nairobi. The bank was formed in 1996 through the Act of Parliament known as the central bank of Kenya act of 1966. The sole purpose of establishing the bank was to achieve independence in monetary and financial policies in Kenya. Business Training in Kenya has more articles

The act under which this bank was formed has been used to determine the policies used in running the bank and in formulating monetary policies. It clearly defined the objectives and functions of the bank. Over the years the act has been restructured to meet the current economic transformation.

The Central Bank Of Kenya is governed by professor Njuguna Ndungu who was appointed in 2007. The professor holds a PhD in economics and he is an associate professor of economics in university of Nairobi.

Banking in Kenya requires good governance. The Central bank is governed by the board of directors which comprise of the governor, deputy governor, permanent secretary to treasury and five non-executive directors. The members of the board are appointed by the president for a period of one term of four years. A member may be reappointed although one cannot exceed two terms. The bank has branches in Kisumu, Mombasa and Eldoret. Headquarter of the bank is in Nairobi.

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The Central Bank Of Kenya The Central Bank Of Kenya

The Central Bank Of Kenya

Understanding The Backbone of The Central Bank Of Kenya

To understand the functions and operations of the bank better, one needs to look deeper into the roots under which it was formed. The vision statement of the institution is to become world class modern central bank. The core mandate of the bank is clearly stated in section four of the central bank of Kenya which stipulates that the main objective is to formulate and implement monetary policy to attain and uphold stability in price levels, support economic policy of government which includes objective for growth and employment.

The CBK falls under the docket of Minister for Finance and has sole role of devising and executing monetary policy. It is supposed to foster the liquidity, solvency and proper operation of the financial structure. There are subsidiary mandate of CBK such as formulation and implementation of foreign exchange policy, hold and manage the reserves from foreign exchange, and act as a banker and adviser to fiscal agent of government. CBK is supposed to issue currency notes and coins.

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It is important to avail to the public information about the bank in order to improve service provision of banking in Kenya. The head office premise of CBK is located along Haile Selassie Avenue, Nairobi. The countrywide branches include Nkrumah Road in Mombasa, Jomo Kenyatta Highway in Kisumu, Uganda Road in Eldoret, and George Morara Stareet in Nakuru. Other branches are; Kenya Commercial bank Building in Nyeri and Co-operative Bank Building, Njuri Ncheke Street in Meru.

The Bank Supervision Department of The Central Bank Of Kenya

The core mandate of the department is to promote liquidity, solvency and proper functioning of a steady financial system targeted on market. It therefore works with the aim of developing the legal and regulatory structure to enhance steady, efficiency and access to monetary services. The department processes of licenses for commercial Banks, mortgage finance, building societies, Non-banking, and credit finance companies. Onsite evaluation to ensure the financial conditions of the companies comply with the statutory and prudential requirements is carried out by BSD. The banking sector in Kenya is regulated to ensure the inspection and report prepared thereafter tally with the requirements and fiscal policies. The department surveys institutions which are licensed under the CBK Act. The survey is conducted through periodical analysis and receipts. Whenever banking institutions need to open or close location for businesses, appoint directors, introduce new products/services, alter charges or renew license the department offers approval. These operational requirements are based on the statutory and prudential platforms.

The Central Bank Of Kenya Act

The CBK Act is the garment upon which the bank was formed and it acts as a basis for evaluation and monitoring of the functions and service delivery to the economic market. It is divided into sections. Each of these sections carryout specified and well defined roles to promote the banking sector in Kenya. These are; establishment, constitution and objects, capital and reserves, management, and currency. The establishment part covers legal issues, principals, monetary policies, head office and branches. Capital and reserves covers authorized capital of the bank and general reserves.

Networking and technological advancement in the banking sector has seen more branches of Central Bank of Kenya extend its services to other parts of the country such as Eldoret, Meru and Mombasa. Assets, deposits and products have increased in size and improved in quality delivery. Automation of the services has rendered the access to services worthwhile. Technology has made the services fast and efficient therefore enhancing the economic and financial sector in Kenya.

The Central Bank Of Kenya carries out frequent economic review to show the recent advancements. The review includes developments in credit and banking, inflation, money, interest rates and rates of exchange. It also shows the government budget operations, balance of payments and public debt. The review offers feedback on money supply into the economy and how it affects domestic credit expansion. It also reflects on interbank rate to oversee reasonable interest rate offers from banks to customers. The central bank of Kenya calculates the real GDP growth of the country and checks on inflation rates in order to enhance economic balance.

Treasury securities are instruments used for debt financing. The government of Kenya offers these through central bank of Kenya since it was appointed as agent for the government. The treasury securities are offered in two categories of treasury bills and treasury bonds. Treasury bills are short-term securities while the treasury bonds are long-term. Participants are required to purchase and sell debt securities. These consist of corporate and government bonds sold at the stock exchange market. The central bank issues circulars with relevant information on policy announcements that have direct impact on commercial banks and public sector through the director of banking services department. And thus the The Central Bank Of Kenya

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