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- How does the Central Bank intervene in the foreign exchange market?
The Central Bank intervenes by selling foreign exchange from its reserves
into the market when there is excess demand for forex, or buying foreign
exchange from the market if there is excess supply. The Central Bank intervenes
only in the wholesale market i.e. by buying or selling forex to commercial
banks
- What is Open Market Operation (OMO) ?
Open Market Operations involves the sale or purchase of government
securities (Treasury bills/bonds) with the aim of influencing liquidity conditions
in the financial system. The purpose, therefore, is to sell securities in order to
mop up excess liquidity and to buy the same when expanding credit to the
financial system.
- What option is there for an investor who wishes to en-cash the Treasury bills/ bonds
before maturity?
Investors with cash-flow problems are allowed to sell back (rediscount) their
T/Bills/bonds before maturity to Central Bank as a last resort. However,
Treasury Bonds are rediscounted only upon confirmation from the Nairobi
Stock Exchange that there is no prospective buyer.
- What are the working hours of the Central Bank of Kenya?
The Central Bank of Kenya is open for business Monday through Friday
from 8.45 am to 2:00 pm. The Bank remains closed on weekends and
public holidays.
- Can I open an account with the Central Bank of Kenya?
No. The Central Bank of Kenya does not offer commercial banking
services, such as the opening of accounts, to the general public.
- Can I cash cheques at the Central Bank of Kenya?
No. cheques must be deposited at Commercial Banks and cleared to the
Central Bank of Kenya through the KBA Clearing house.
- Does the Central Bank of Kenya offer any other services to the general public?
Yes. The Bank exchanges mutilated notes and coins and sells
commemorative Coins.
- What is EFT?
EFT is an acronym for Electronic Funds Transfer. It refers to the
movement of funds from one bank account to another by means of
electronically communicated payment instructions.
- What are some of the benefits of the EFT?
The benefits accruing from the use of a fast, secure and timely funds
transfer system include:
• Efficient and highly dependable method that improves service
delivery to recipients by providing timely payments
• Increases security by eliminating lost, forged or stolen cheques
• Eliminates the costs of printing and handling physical cheques
• Improves cash forecasting owing to the elimination of cheque float
• Streamlines operations by reducing paper work and reconciliation.
- Who bears the EFT transfer fees?
As per conventional practice the transferor (paying entity) and transfer
(receiver) will bear some costs of the transaction. These may include bank
charges at the respective Commercial Banks.
- What should I do if I come across counterfeits/forged foreign currency notes?
All authorised dealers should have the necessary equipment to detect
counterfeits/ forged foreign currency notes. If in doubt, notes should be
presented to an authorised dealer for authentication. If a note is confirmed
to be a Counterfeit/ forgery, the authorised dealer will seize it and forward to
the Central Bank for investigation and further action. A customer reporting
the counterfeit will be issued with an evidencing receipt by the authorised
dealer.
- How does the Central Bank monitor foreign exchange transactions in the market?
Information on receipts and payments to/from customers and reserves held
by commercial banks and Forex Bureaus in various currencies are submitted
to the Central Bank daily, weekly and monthly. This enables the Central Bank
to monitor the foreign exchange market activity on an ongoing basis. In
addition, the Central Bank inspectors frequently perform on-sight inspections
on all foreign exchange activities of authorised dealers.
- Can an individual walk into the Central Bank and buy Foreign Currency?
No. Present policy does not allow individuals to buy foreign currency directly
from the Central bank of Kenya. The Central Bank may only engage in foreign
exchange transactions with commercial banks, public entities, international
financial institutions, foreign central banks and its staff going on official
engagement abroad.
- How are official (external foreign) reserves managed?
The Central Bank of Kenya is by law responsible for managing the official
foreign exchange reserves. The management process involves investing the
reserves in marketable foreign securities denominated in convertible
currencies held in correspondent banks abroad. The reserves are
denominated in the major currencies, namely US Dollars, Sterling Pounds
and the Euro.
- What are the reserves used for ?
- Assist the Government in meeting its foreign exchange needs and
external debt obligations
- Maintain a reserve for national emergencies and disasters
- Maintain foreign currency liquidity to absorb shocks in time of crisis.
- Intervention to support the local currency in periods of volatility
- How is RTGS different from Electronic Fund Transfer System (EFT)?
EFT is an electronic fund transfer modes that operate on a deferred net
settlement (DNS) basis which settles transactions in batches. In DNS, the
settlement takes place at a particular point of time. All transactions are held up
till that time. For example, EFT settlement takes place once a day. Any
transaction initiated after a designated settlement time would have to wait till
the next designated settlement time. Contrary to this, in RTGS, transactions
are processed continuously throughout the RTGS business hours.
- How is RTGS different from the cheque payment system
A cheque is a debit instrument that requires the drawer to have sufficient funds
at the time of presentation to the paying bank. Cheque payment operates on
a deferred net settlement basis in batches. The clearing cycle for cheques in
Kenya is T+ 3 that is a customer will receive value after three working days
and payment is not guaranteed as is the case with RTGS payments.
- Is there any minimum / maximum amount stipulation for RTGS transactions?
The RTGS system is primarily for large value and time critical transactions. No
minimum or maximum stipulation has been fixed.
- What is the time taken for effecting funds transfer from one account to another
under RTGS?
Under normal circumstances the beneficiary branches are expected to receive
the funds in real time as soon as funds are transferred by the remitting bank.
The beneficiary bank has to credit the beneficiary’s account within two hours
of receiving the funds transfer message.
- Would the remitting customer receive an acknowledgement of money credited to the
beneficiary’s account?
The remitting bank receives a message from the Central Bank that money has
been credited to the receiving bank. Based on this the remitting bank can
advise the remitting customer that money has been delivered to the receiving
bank.
- Would the remitting customer get back the money if it is not credited to the beneficiary’s
account? When?
Yes. It is expected that the receiving bank will credit the account of the
beneficiary instantly. If the money cannot be credited for any reason, the
receiving bank would have to return the money to the remitting bank within 2
hours. Once the money is received back by the remitting bank, the original
debit entry in the customer’s account is reversed.
- What time is the RTGS service window available?
The RTGS service window for customer’s transactions is available from 9.00
hours to 14.00 hours on week days.
However, the timings between these hours would vary depending on the
commercial bank. For inter-bank transactions, the service window is available
from 9.00 hours to 16.00 hours on week days.
- What are Processing Charges/Service Charges for RTGS transactions?
Levy of service charges by banks is left to the discretion of the respective
banks. The bank-wise details of charges levied are available on the CBK website
– www.centralbank.go.ke
- What is the essential information that the remitting customer would have to furnish
to a bank for the remittance to be effected?
The remitting customer has to furnish the following information to a bank
for effecting a RTGS remittance:- Amount to be remitted
- His account number
which is to be debited
- Name of the beneficiary bank
- Name of the beneficiary
customer
- Account number of the beneficiary customer 6. Sender to receiver information,
if any
- Do all commercial banks in Kenya provide RTGS service?
Yes, all the commercial banks in Kenya are KEPSS participants.
- Can KEPSS Process Transactions in Foreign currency?
YES, but only to the extent that a Commercial bank is cleared by Kenya Bankers’
Associates (KBA) to open and operate such settlement accounts at the Central
Bank of Kenya. Currently transactions are processed in three foreign currencies,
namely:- US dollars
- Sterling Pounds
- The number of currencies will increase once the East Africa Cross Border
Payment System is implemented
- How secure is KEPSS?
SWIFT is the main message carrier for KEPSS which is a safe and secure
financial infrastructure that is used worldwide.
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