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How to Apply for a Microfinance Bank License in Kenya

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How to Apply for a Microfinance Bank License in Kenya by Kenyans247(1): Sat Jan 2020 11:08am
Procedure
Apply in Person
Stage 1: Approval of Name


Contact the Central Bank of Kenya at an early stage for a preliminary meeting to dis.cuss CBK licensing requirements and related issues
Seek CBK’s approval for the use of the word Microfinance Bank” e.g. XYZ Microfinance Bank Limited
Book an appropriate name with the Registrar of Companies and write to the Central Bank to seek approval for the name.
The name a search and reservation takes one day to complete and a fee of Ksh.1000 is charged for the process.
After the name has been approved by the Central Bank, you should proceeded to the Registrar of Companies for incorporation of the proposed bank as a limited liability company.
Upon incorporation of the Limited Liability Company, apply to CBK for a Commercial Bank License.

Stage 2: Application for Licence
Complete and submit a certified Application Form Form-1 of the First Schedule to the Microfinance (Deposit Taking Microfinance Institutions) Regulations 2008 to CBK accompanied by all supporting documents, including: https://www.centralbank.go.ke/images/docs/forms/mfi/LicenceApplicationFormMicrofinanceBank.pdf
(a). Certified copy of the Certificate of Incorporation.
(b). Certified copy of the tax Personal Identification Number (PIN) certificate.
(c). Certified copy of the registered Memorandum and Articles of Association indicating core capital (at least Kshs 20 million or Kshs 60 million for community and nationwide microfinance bank business, respectively).
(d). Verified official notification of the company’s registered place of business, including the prospective places of business (Head Office, branches, agency and outlets, if any).
(f). Pay a non-refundable application fee of Kshs 5,000 to the Central Bank by Bankers cheque or by such other mode of payment as the Central Bank may prescribe.
(e). A declaration witnessed by an advocate or Commissioner of Oaths indicating that the proposed entity has no existing scheme of arrangement with its creditors.
Provide evidence of minimum core capital (Kshs 20 million and Kshs 60 million for a “community” and “nationwide” microfinance bank business, respectively)
Prepare and submit a comprehensive feasibility study and business plan
Duly complete and submit the “Fit and Proper Forms” for all significant shareholders (at least 10% shareholding) and proposed directors accompanied by supporting documentation (certified)

Stage 3: Letter of Intent
Upon assessment and fulfilment of all the requirements in stage two, the Central Bank will issue a Letter of Intent, which is an approval in principle and advises the applicant on the next steps and requirements to be fulfilled before issuance of a licence and approval to commence operations, including:
(a). payment of licence fees to the Central Bank by bankers cheque or such other mode of payment that the Central Bank may prescribe (Kshs 150,000 for nationwide microfinance bank, and Kshs 100,000 for community microfinance bank) https://www.centralbank.go.ke/images/docs/forms/mfi/FitProperFormDirectorsSeniorOfficersMicrofinaceBanks.pdf
(b). preparation of operating premises to meet prescribed standards in readiness for inspection by the Central Bank
(c). completion and submission of the “Fit and Proper” Forms for key senior managers (to be guided by the Central Bank) accompanied by all the supporting documentation.
(d). preparing and putting in place the proposed management information system (MIS) and other institutional structures required to conduct the microfinance bank business

Stage 4: Issuance of Licence
The Central Bank, if satisfied that the applicant has met all the requirements of the above three stages, may then issue a licence; the Central Bank will duly specify the institution by placing a notice in the Kenya Gazette, thereby legally authorizing the applicants to commence microfinance bank business.

Required Documents
Certified copy of the Certificate of Incorporation.
Certified copy of the tax Personal Identification Number (PIN) certificate.
Certified copy of the registered Memorandum and Articles of Association indicating core capital (at least Kshs 20 million or Kshs 60 million for community and nationwide microfinance bank business, respectively).
Verified official notification of the company’s registered place of business, including the prospective places of business (Head Office, branches, agency and outlets, if any).
Pay a non-refundable application fee of Kshs 5,000 to the Central Bank by Bankers cheque or by such other mode of payment as the Central Bank may prescribe.
A declaration witnessed by an advocate or Commissioner of Oaths indicating that the proposed entity has no existing scheme of arrangement with its creditors.

Office Locations & Contacts

Central Bank of Kenya
Haile Selassie Avenue
P.O Box 60000 – 00200,
Nairobi, Kenya
Tel / Fax: +254 20 286 0000
Phone: +254 20 286 1000, +254 20 286 3000, +254 709 081 000, +254 709 083 000
Email: comms@centralbank.go.ke
Website:CBK Website https://www.centralbank.go.ke/contact-us/

Eligibility

Any person is eligible to make an application to run a Micro Finance Bank in Kenya.
This application allows a person to operate a Micro Finance Bank in Kenya.
In Kenya no person shall, operate a Micro Finance Bank in Kenya unless authorized by the Central Bank of Kenya.

Fees

The name a search and reservation fee of Ksh.1000
Application fee is Ksh. 5,000 for a new licence (fees are in bankers cheque payable to the Central Bank of Kenya);
The licence fee of Kshs 150,000 for nationwide microfinance bank, and Kshs 100,000 for community microfinance bank is charged

Validity

The validity period is one year.
A licence issued under this section shall, unless earlier revoked, expire on the 31st December next following the date of issue:

Documents to Use

Application Form Form-1 of the First Schedule to the Microfinance (Deposit Taking Microfinance Institutions) Regulations 2008 https://www.centralbank.go.ke/images/docs/forms/mfi/LicenceApplicationFormMicrofinanceBank.pdf
“Fit and Proper” forms for proposed directors and Chief Executive Officer https://www.centralbank.go.ke/images/docs/forms/mfi/FormDeterminingProfessionalMoralSuitabilitySeniorOfficers.pdf
“Fit and Proper” forms for all significant shareholders https://www.centralbank.go.ke/images/docs/forms/mfi/FormDeterminingSuitabilityProposedSignificantShareholders.pdf

Processing Time

The processing time is 120 days.

Instructions

For issuance of a license, please submit the duly completed form, to the CBK
For purposes of application for a new license, an applicant is required first to seek approval name from the Central Bank of Kenya and thereafter will be advised on the documents to be submitted together with the duly completed form.
Upon satisfying all the requirements and paying the applicable licensing fees the applicant will be issued with a license.
All information provided shall be treated as confidential.

Required Information

Name of applicant
Head/ Main office
Physical and postal address of head office/ proposed new outlet
Date of incorporation
Form of incorporation
Description of the applicants business or functions
Certificate of incorporation Number
Details of subsidiaries and affiliates (Name of Outlet, County, City/Town, Street, Building, Date opened)
Particulars of shareholders (Name, Nationality, Date of acquisition, Amount of shareholding, % of shareholding)
Particulars of directors (Name, Nationality, Date of appointment, Level of education)
Particulars of the officers in the order of seniority (Name, Designation, Nationality, Date of appointment)
Ownership profiles
Shareholding in any other financial institution
Name of applicants external auditors
Declaration

Need for the Document

This license allows the holders to operate a Micro Finance Bank in Kenya.
A person who operates a Micro Finance Bank without a valid license commits an offence and shall, on conviction be liable to a fine not exceeding five hundred thousand shillings, or to imprisonment for term not exceeding three years, or to both.

Information which might help

The Micro Finance Bank shall be body corporate with perpetual succession and a com

https://centralbank.go.ke/images/docs/The_Central_Bank_of_Kenya_Act_1st_January_2014.pdf

Source https://www.wikiprocedure.com/index.php?title=Kenya_-_Apply_for_a_Microfinance_Bank_License

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