Legislators are pushing for a review of a controversial new Central Bank of Kenya (CBK) rule on large cash transactions.
This is even as the regulator maintains that the rule, which compels lenders to have their customers complete forms explaining the nature of any cash transactions of Sh1 million and above, “is here to stay”.
Members of the Senate Committee on Finance, Commerce and Economic Affairs, Mr Billow Kerrow, Mr Mutahi Kagwe, Mr Kimani wa Matangi and Mr Moses Wetang’ula yesterday questioned the efficacy of the rule, saying it is prohibiting trade due to its restrictive nature.
They said small traders had resorted to keeping their money at home instead of banks to avoid the “inconvenience” of the elaborate rules to withdraw or deposit money under the new rules.
“The rule is futile because traders, including businessmen in places like Gikomba, have resorted to buying safes and keeping money at home instead of being inconvenienced in banks all day,” said Mr Kagwe, adding that the rule had “thrown the business community under the bus”.
HURTING THE ECONOMY
Mr Kerrow said the new rule was impeding small business and that traders were now increasingly shunning banks.
“The Kenyan economy is cash-based and the rule is, therefore, hurting legitimate business,” said Mr Kerrow.
Mr Wetang’ula said he was a victim of the stringent rule, having been held up at the branch of a local bank for questioning for over two hours on the reasons he was withdrawing funds amounting to over a million shillings.
The legislators raised their concerns when Central Bank of Kenya Governor Patrick Njoroge appeared before the Senate Committee on Finance, Commerce and Economic Affairs to explain why the roll-out of new currency notes as stipulated in the law has been delayed.
Dr Njoroge insisted the rule, meant to curb money laundering and illicit flow of funds, “is here to stay” and urged banks to innovate to enable consumers to efficiently comply with it.
“We want to protect the financial system, banks and citizens,” said Dr Njoroge while adding that the regulator would continue to work with banks to eliminate the bottlenecks in its implementation.