CBK boss agrees to publish new law on bank transactions

Central Bank of Kenya Governor Patrick Njoroge finally bowed to pressure from the National Assembly after he agreed to publish banking regulations prescribing customer deposits and withdrawals after months of exchanges and threats to have him fired.

On Tuesday, Dr Njoroge was required to appear before the House committee on Implementation to explain why he had failed to publish the regulations.

He however sent a written apology, saying he was consulting the committee on Delegated Legislation on the formulation of the regulations.

“We are in the process of implementing section 65 of the Finance Act, 2018 and we are currently consulting the committee on Delegated Legislation. In line with these consultations, we are unable to appear before you and we are seeking two weeks,” Dr Njoroge told the committee chaired by Narok North MP Moitalel ole Kenta.

TENURE

But even as the CBK boss showed commitment, Mr Kenta directed that he appears before the committee within 14 days or face sanctions.

“The governor is saying that they will be implementing the law and they will meet us in two weeks. Considering the new development, we will liaise with the Delegated Legislation committee and ensure that without fail, the governor implements the law,” Mr Kenta told the committee.

Last week, the MPs said that his failure to publish the banking regulations as provided for in the Banking Act, which was amended in August last year through the Finance Act, was contemptuous of parliamentary proceedings and reason enough to send the governor home.

The CBK governor was appointed in June 2015 for a renewable term of four years.

Though the President has the powers to renew his second term without the input of the MPs, they vowed to make his reappointment difficult unless he complied with the law.

NON-COMPLIANCE

The Finance Act mandates the CBK boss to publish the regulations and submit them to the National Assembly within 30 days of its coming into force for consideration, in line with the Statutory Instruments Act.

What infuriated MPs, however, is that more than six months down the line, the CBK boss is yet to comply with the law.

Dr Njoroge instead chose to issue guidelines in form of memos and circulars to the banking industry, which MPs dismissed as illegal.

“What this man is doing is to undermine the authority of Parliament and the Executive. The President assented to this law. He should resign because he has no confidence in the authority of this House. This House does not act in vain and must be respected accordingly,” Mr Kenta said last week.

CORRUPTION

When he appeared before the committee last month, Dr Njoroge defended his actions, saying, the law as it is could not be implemented as it would be akin to relaxing money laundering and terrorism laws.

He also warned that doing so would frustrate the war against corruption and cut off Kenya’s banking sector from the best practices in the global banking system like Financial Action Task Force (FATF).

“The adverse effects of the amendment on the banking sector, would be immediate termination of relationships by foreign correspondent banks and closure of accounts of Kenyan banks (derisking),” Dr Njoroge had warned.

Now that he has climbed down from his hard stance, it is unclear how he intends to ensure he does not annoy MPs or eat his own words.

Last week, House committee on Finance and National Planning chairman Joseph Limo (Kipkelion East) — faulted the CBK boss’ actions.

He has no authority to choose which sections of the laws passed by the House to implement, the MP said.