The Central Bank of Kenya has termed the draft Financial Market Conduct Bill, 2018, as a direct attack on its functions.
This is not far from the truth; Treasury is proposing to create additional regulatory bodies in the financial sector to perform similar, if not all, functions currently undertaken by the Central Bank.
For example, the proposed Financial Markets Conduct Authority (FMCA) is to regulate the amount of credit lenders will give to borrowers, interest charges, credit lending hours and issue banks with certificates of good conduct.
These are core functions performed by CBK which is mandated under Article 231 of the Constitution to license and supervise banking institutions. The regulator is the custodian of interest rate charges and sets lending bases from which banks derive their rates.
It is also disturbing to note that Treasury did not consult CBK and the governor only came to know of the draft bill through the Press.
This begs the questions; who did Treasury consult? What does it really want to achieve through this bill and what motivated the proposed legislation? Is someone retaliating against the CBK over its stand on the interest rates cap?
The bodies proposed in the Bill will require employees and functioning offices — further straining the country’s wage bill.
There is no justification whatsoever for this proliferation of bodies and duplication of functions that are already being done.
Quote of the Day: “Let us read, and let us dance; these two amusements will never do any harm to the world.”
The French writer, philosopher and playwright died on May 30, 1778.