demonitisation

You will be left with worthless cash - CBK warns

Majority of those exchanging the old currency are dealing below Sh500,000

In Summary

• CBK is monitoring persons exchanging old notes as it seeks to curb circulation of illicit money.

• Governor Patrick Njoroge has assured of a smooth demonitisation process.

CBK Governor Patrick Njoroge has accused the Judiciary of delaying the recovery of Chase Bank cash. /FILE
CBK Governor Patrick Njoroge has accused the Judiciary of delaying the recovery of Chase Bank cash. /FILE

Millions of the old generation Sh1000 notes are still stashed in homes the Central Bank of Kenya said on Thursday.

Governor Patrick Njoroge said those holding onto the notes whose value runs into billions risk clinging to invalid tender come October 1.

“There are people who are holding cash they got illegally. What I can tell them is that come October 1, they will be holding papers that they stole, they can go ahead and burn them,” Njoroge said.

 

He said CBK and commercial banks are alert to ensure illegally acquired money does not make it into the banking system.

Njoroge said strict monitoring of persons exchanging old notes has seen the corrupt shy away from banking halls.

A huge number of Kenyans also lack access to financial institutions which has seen them hold on to the old currency.

Speaking at post Monetary Policy Committee(MPC) in Nairobi yesterday, Njoroge said majority of those exchanging the old generation currency are dealing below Sh500,000.

CBK has set September 30 as the deadline for surrendering of the old generation Sh 1,000 currency as it makes a complete switch to the new generation notes.

In a June 10 circular to commercial banks, CBK instructed them to file weekly reports on persons exchanging old generation notes as part of strict measures to curb circulation of illicit money in the economy.

The regulator downplayed concerns of a shortage in the new currency, saying the initial circulation was a pilot phase.

 

Last month, bankers in Nakuru, Naivasha, Gilgil, Nyandarua and other major towns reported shortages, as they called on CBK to increase liquidity.

Njoroge said a few notes were released in the market as a pilot scheme before the major roll-out which started last week.

“When we launched we did not go full blast. We just put out some(notes) for people to get a test and feel. However from last week, we have been putting out only new generation bank notes with most banks feeding their ATMs with the new currency,” Njoroge told journalist at the CBK headquarters.

He said all Automated Teller Machines  across the country are from today expected to be dispensing new generation notes.

Njoroge said most July salaries will also be paid using the new 1000-shilling notes with the other denominations being a mix, as the old ones continue to be phased out.

The government is hopeful the demonitisation will help deal with the corrupt who have stashed millions of stolen cash in homes, while curbing illicit financial flows.