Agents to offer bank services

• New Act allows them to provide banking on behalf of established finance institutions

By April this year, you will be able to do your banking as you shop in a supermarket or as you buy Hedex in a local chemist.

This is part of radical changes in the Banking Act through the Finance Act of 2009, proposed during the 2009/2010 budget reading.

The Finance Act whose provisions came into effect on January 1, 2010, allows agents to carry out banking services on behalf of established commercial banks and other financial institutions.

The amendment gives the Central Bank of Kenya (CBK) power to collect data and information from agencies and carry out inspection on them.

While allaying fears that the model will kill micro finance institutions and saccos, CBK governor Prof Njuguna Ndung’u, said it will instead help support the activities of micro finance.

“Each market player will develop their own market niche in line with their relative comparative advantages and strengths,” Prof Ndung’u said.

But, Prof Ndung’u says, although there is room for MFIs’ growth, only one was licensed last year.

The community-based institutions, the governor said, will come in handy particularly where banks want to establish a presence in the rural or remote areas of the country.

In proposed guidelines for the agent banking model, CBK says the country will leverage on the rapidly growing mobile phone infrastructure, the Post Office’s — the sleeping giant — facilities, delivery channels such as shops, supermarkets and pharmacies among others.

Among an array of services that CBK proposes to be offered by the agents appointed by individual banks and approved by the bank include deposits and withdrawals, mini-statements, disbursement and payment of loans, bill payments, and balance enquiries.

However, agents will not be allowed to offer banking services on their own account, charge fees, open accounts and appraise loans.

“The framework will play a complementary role for all players in the market. So these fears are misplaced,” he assured, adding that the move was well in line with objectives envisaged in Vision 2030 of having an inclusive financial system.

Banks will not need to have a physical presence in the areas where they provide their services.