Microfinance (Categorization of Deposit-Taking Microfinance Institutions) Regulations, 2008 (Cap. 493D)

MICROFINANCE (CATEGORIZATION OF DEPOSIT-TAKING MICROFINANCE INSTITUTIONS) REGULATIONS, 2008 [L.N. 57/2008.] 1. Citation These Regulations may be cited as the Microfinance (Categorization of Deposit-Taking Microfinance Institutions) Regulations, 2008. 2. Interpretation In these Regulations, unless the context otherwise requires— “community microfinance institution” means an institution licensed to carry out deposit-taking microfinance business in the manner prescribed in regulation 3(b); “nationwide microfinance institution” means an institution licensed to carry out deposit-taking microfinance business in any part of Kenya. 3. Types of categories The Central Bank may licence any institution in Kenya, either as a— (a) nationwide microfinance institution, which may carry out its deposit-taking business operations countrywide; or (b) community microfinance institution which may carry out its deposit-taking business operations— (i) within one Government Administration District; or (ii) within one Government Administrative Division, where the deposit-taking business is operated in a City; or (iii) in any other specified region as the Central Bank may deem appropriate. 4. Factors for assessing categorization The Central Bank shall consider the following factors necessary for categorizing an institution— (a) the reasons given by an institution on the proposed area of operation; (b) adequacy of the capital structure of the applicant; (c) corporate governance, information technology system and internal controls; (d) character, experience and qualifications of proposed directors and officers; (e) the target clientele, feasibility study and viability of the institution; (f) all other requirements specified in the Act and the regulations; and (g) any other factors that the Central Bank may deem appropriate. 5. Persons not to operate outside prescribed categories (1) No person shall carry out deposit-taking microfinance business outside the prescribed categories. (2) A person who contravenes paragraph (1) commits an offence. 6. Application for categorization (1) A person wishing to carry out deposit-taking microfinance business shall submit an application to the Central Bank indicating the category within which the applicant wishes to operate. (2) The Central Bank, in making its decision as to licence an institution as a nationwide microfinance institution or community microfinance institution, shall consider the factors set out in regulation 4 of these Regulations. (3) The decision of the Central Bank shall be final. 7. Conversation without approval prohibited (1) No person shall convert a community microfinance institution into a nationwide microfinance institution without the written approval of the Central Bank. (2) A person who contravenes paragraph (1) commits an offence. 8. Application to convert community to nationwide An application to convert a community microfinance institution into a nationwide microfinance institution shall be made to the Central Bank as set out in the Schedule to these Regulations. 9. Central Bank to grant approval The Central Bank, if satisfied that an institution meets the requirements necessary to convert into a nationwide microfinance institution, shall grant an approval for conversion and may attach such conditions as the Central Bank may deem necessary. 10. Prohibition to convert from nationwide to community A nationwide microfinance institution shall not convert into a community microfinance institution. 11. General penalty A person who contravenes these Regulations commits an offence and is liable on conviction to a fine not exceeding one hundred thousand shillings or to imprisonment for a term not exceeding one year, or to both. SCHEDULE [Regulation 8.] APPLICATION FORM TO CONVERT A COMMUNITY MICROFINANCE INSTITUTION TO A NATIONWIDE MICROFINANCE INSTITUTION