The steps to follow in applying for a microfinance bank licence are as shown below:

Procedure

Apply in Person

Stage 1: Approval of Name

  1. Contact the Central Bank of Kenya at an early stage for a preliminary meeting to dis.cuss CBK licensing requirements and related issues
  2. Seek CBK’s approval for the use of the word Microfinance Bank” e.g. XYZ Microfinance Bank Limited
  3. 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.
  4. 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.
  5. Upon incorporation of the Limited Liability Company, apply to CBK for a Commercial Bank License.

Stage 2: Application for Licence

  1. 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:
    (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.
  2. Provide evidence of minimum core capital (Kshs 20 million and Kshs 60 million for a “community” and “nationwide” microfinance bank business, respectively)
  3. Prepare and submit a comprehensive feasibility study and business plan
  4. 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:
  1. (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)
    (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

  1. Certified copy of the Certificate of Incorporation.
  2. Certified copy of the tax Personal Identification Number (PIN) certificate.
  3. 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).
  4. 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).
  5. 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.
  6. 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

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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

Processing Time

  • The processing time is 120 days.

Instructions

  1. For issuance of a license, please submit the duly completed form, to the CBK
  2. 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.
  3. Upon satisfying all the requirements and paying the applicable licensing fees the applicant will be issued with a license.
  4. All information provided shall be treated as confidential.

Required Information

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

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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 common seal, with power to acquire, own, possess and dispose of property, to contract, and to sue and to be sued in its own name.

Useful External Links

About the Author

Sande Kennedy is the founder and Editor in Chief of SandeKennedy.co.ke & Kenyans247.co.ke He is a Kenyan-based Internetprenuer,blogger Political Activist & informer who has an interest in politics, governance, corporate-fraud and human-interest. Kindly drop me a note if you feel aggrieved on any matter that you would want to be highlighted  Twitter: @nyosake , Instagram: @itssandekennedy WhatsApp: +254791890826 Read More about me here