The Kenya Bankers Association (KBA) is set to begin kicking out wayward members from the clearing house from June upon approval of its self-regulatory framework.
Habil Olaka, KBA Chief Executive Officer, stated that the framework would get rid of such members and effectively lock them out. The clearing house whose function is to transfer money between the members facilitates them to transact business and get liquidity support whenever they require credit.
Mr Olaka expressed, “Given what has evolved in the market and given what kind of anxiety that has been created, and essentially pointing out that there could be areas of corporate governance issues, transparency and accountability, we need to see how we can reinforce the system and what role the KBA can play,” .
“The regulation should be enforceable and not depend on ‘moral persuasion’.”He went on to say. Adding that KBA is aiming at preparing its members to adhere to the set standards.
The self-regulation will also deal squarely with actions that bring industry-wide problems, including comments that may lead to a loss of confidence in the sector. Expulsion will be even more disciplinary given that the inter-bank exchange is already replete with suspicion that has seen banks cut on interbank lending forcing the Central Bank of Kenya (CBK) to intervene.
According to the latest CBK data, the value of money exchanged between banks fell from Sh19 billion in the week ending March 30, to Sh9 billion the week ending April 6, and only Sh5 billion last week.