Lawmakers reject proposal to raise bank capital requirements - paper
01 September 2016, 21:15
Nairobi (Reuters) - Kenya's parliament has voted down a proposal by the finance ministry to increase commercial banks' core capital from 1 billion to 5 billion shillings ($49.38 million), a newspaper reported on Thursday.
It will be the second time in as many years that parliament has rejected the plan, having thrown out a similar move in August 2015.
In his 2016/17 (July-June) budget speech, National Treasury Cabinet Secretary Henry Rotich said he planned to reintroduce the measure.
Privately owned Daily Nation said that lawmakers voted by acclamation to approve changes to the Finance Bill 2016 made by the Finance, Planning and Trade Committee.
"The committee agrees we need to encourage more Kenyans to invest in the banking sector also. We don't want to make it an exclusive business for the few who have the high capital they were proposing," committee chairman Benjamin Lang'at was quoted as saying.
"In Kenya, we have not reached that stage where we can say we have enough banks and so we can bar others from entering the market."
Analysts have said in the past a move to raise bank capital requirements could have forced mergers and acquisitions as smaller banks sought partners to survive.
Kenya has 43 commercial banks ranging in size from KCB Group and Equity Bank in the top league and smaller homegrown lenders like Jamii Bora Bank.
The central bank was also opposed to the proposal, saying it would lock out smaller lenders which offer niche services and products.