3 banks fined Sh1m each in NYS scandal

Central Bank governor Patrick Njoroge before the National Assembly Public Accounts Committee on August 4 /HEZRON NJOROGE
Central Bank governor Patrick Njoroge before the National Assembly Public Accounts Committee on August 4 /HEZRON NJOROGE

CBK governor Patrick Njoroge yesterday said three banks have been fined Sh1 million each for violating banking regulations in handling Sh791 million lost through National Youth Service scandal.

They are Family Bank, Faulu Micro Finance Ltd and Cidian Bank – formerly K-Rep. The three were fined for not reporting suspicious NYS payments.

Njoroge told the Public Accounts Committee chaired by Rarieda MP Nicholas Gumbo that Family Bank only reported some of the suspicious financial transactions to the Financial Reporting Centre.

“We conducted targeted inspection of Family Bank and in the process discovered that two other banks were involved in the money trail. They were inspected and found to be culpable of breaking the CBK prudential guidelines,” he said.

Nine senior directors of Family Bank, who were to be re-vetted by CBK officials, resigned. Some senior managers at Faulu Microfinance and Cidian are to be re-vetted for engaging in financial misconduct.

Gumbo and Balambala MP Abdikadir Aden accused the CBK of failing in its duty to enforce the rules on financial operations on banks. They said some of the suspects in the NYS scandal withdrew more than Sh86 million in one day against the required maximum of Sh1 million limit.