•Three universities in May were declared technically insolvent, operating on bank overdrafts and failing to remit billions in employees' statutory deductions.
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The University of Nairobi has suspended parallel management of self-sponsored programmes, citing reduced revenues.
In a statement on Monday, University Council chairperson Julia Ojiambo said the decision was informed by a meeting held last week on Tuesday.
"The council at its meeting held on November 19 comprehensively deliberated on the establishment and functions of the centre for self-sponsored programmes," read the statement.
All staff under the centre of self-sponsored programmes will be redeployed into the mainstream services of the university.
They will be assigned duties and responsibilities in line with their training.
Ojiambo said the centre for self-sponsored programmes' banking facilities shall until further notice continue to be operated by the council's duly authorised signatories.
"All activities previously under the centre of self-sponsored programmes will be redesignated to other competent university organs."
In a memo dated November 15, Mbeche outlined a series of austerity measures to cut costs at the university following a directive by President Uhuru Kenyatta.
The measures include a stop to office tea and snacks and suspension of capital projects for the financial year 2019-20.
Mbeche also said there would be no more MoU between the university and any private entity involving new commitment or outflow.
Any surplus invested in T-bills was to be liquidated and submitted to the Treasury by November 15.
Mbeche went ahead to say that any revenue generated by the university is government money and that the institution was obligated to make statutory payments.
UoN was among three universities declared technically insolvent in May, operating on bank overdrafts and failing to remit billions in employees' statutory deductions including loans.
Reports by then Auditor General Edward Ouko showed that the University of Nairobi was drowning in debt. As were Kenyatta University and Multimedia University.
During the 2017-18 financial year, UoN, Kenyatta University and Multimedia University alone reported negative working capital of Sh5.5 billion.
Kenyatta University reported the highest debt at Sh3.4 billion, followed by UoN at Sh1.4 billion and Multimedia at Sh700 million as at June 2018.