Two bankers have petitioned the National Assembly to enact a law that will see only individuals with sound ethical conduct are allowed to practice in the sector.
Susan Nasimiyu Masafu and Charles Ochola Osango said legislation of such a law will go a long way to prevent the sudden collapse of commercial banks as was the case with Imperial Bank in 2015.
“Investigations disclosed the bank's officials were involved in a massive fraud scheme that involved concealing non-performing loans, creating fictitious accounts and siphoning of funds from depositors,” the petition reads.
Masafu and Osango noted that the bank’s depositors and investors incurred significant losses after the bank was closed.
“Thereafter, concerns were raised about corporate governance in the banking sector,” the two said.
Central Bank of Kenya in its report stated that high-level managers and administrators made illegal transactions which cost the bank Sh34 billion. Imperial Bank Limited went into receivership on October 13, 2015.
In a forensic audit report ordered by the CBK, the regulator highlighted fraudulent loans issued and the misrepresentation of its financial statements.
On April 3, 2023, Kenya Deposit Insurance Corporation (KDIC) announced the commencement of payment of protected deposits to depositors of Imperial Bank, eight years after the lender collapsed.
As of 2021, around 4,300 depositors, or eight per cent of Imperial Bank depositors, were yet to get their money back in full.
CBK approved the bank's liquidation in 2021, after Kenya Commercial Bank (KCB) struck a deal to acquire Imperial Bank's assets and liabilities. Most of the cash was used to pay depositors.
In their petition, Masafu and Osango acknowledged the role of the Kenya Bakers Association, Kenya Institute of Bankers and Kenya Forex Bureau Association in promoting professionalism in the sector but said a robust legislative framework is still required.
They said the framework would regulate the norms and standards of banking professionals and thus ensure integrity and accountability in safeguarding the interests of customers and promoting public trust.
The petitioners added that the law should also address fair lending practices, transparency and dispute resolution mechanisms.
House Speaker Moses Wetang’ula committed the petition to the Public Petitions Committee.
