The banking amendment act (2006) and finance act (2006) were gazetted in January 2007. Some changes that will affect the banking system in a busy year, in addition to possible merger activity, include;
- Ban on bank charges within savings accounts. In fact banks must pay interest as long as the account minimums are maintained
- Section 44A (in duplum rule) – banks can only recover principal amount lent, interest to an amount not exceeding principal, and recovery expenses from bad debts. (Fortunately for banks this will not be applied retroactively)
- CBK gets a deputy governor appointed by the president
- CBK also gets to vet the professional and moral suitability of owners (of more than 5%), directors, and senior managers of banks
- All banks must get permission from the finance minister to open branches or establish subsidiaries outside Kenya
- Banks are allowed to invest in real estate. They can also hold land for as long as it takes to realize/recover debt
- Allows sharing of non performing assets information with the Central bank, others banks and credit reference bureaus
