PROCEDURE FOR LICENSING A BANK

The following key steps are followed in starting a bank:-

1. Seek approval of the use of the name ‘’bank’’ or “finance” from CBK.
2. Once CBK has approved the name apply to the Registrar of Companies for incorporation of the proposed bank, mortgage finance company or non-bank financial institution as a limited liability company.
3. Upon incorporation of the limited liability company apply to CBK for a banking, mortgage finance company or non-bank finance institution license. At this stage you should contact the Bank Supervision Department at CBK or download the application forms.
4. Your application should be supported by a business and feasibility study of the proposed institution.
5. You should also provide evidence of your source of capital to start the institution. This may be in the form of certified bank statements or evidence that you hold the amount in government securities such as treasury bills and bonds. Currently a minimum capital of Shs.500 million is required to start a bank or a mortgage finance company. The minimum capital amount will increase to Kshs 700 million as at 31st December 2011 and to Kshs 1 billion as at 31st December 2012.
6. Upon meeting all the requirements, the Central Bank will grant you written approval (approval in principle) to conduct the business of a bank, mortgage finance company or non-bank financial institution, as the case may be.
7. With this approval, you may proceed to obtain premises, Information Technology Systems and recruit staff for the institution.
8. Once you are ready with your premises, invite the Central Bank to conduct an inspection.
9. If the inspection is satisfactory, the Central Bank places a notice in the Kenya Gazette to formally specify the institution.
10. A license is then issued and you can open your doors to customers.

PROCEDURE FOR LICENSING A FOREX BUREAU

The following key steps are followed in starting a forex bureau:-

1. Book an appropriate name with the Registrar of Companies and write to the Central Bank to seek approval for the name. The name should incorporate the words “Forex Bureau”, “Foreign Exchange Bureau” or “Bureau de Change”.
2. After the name has been approved by the Central Bank, register the company and then make a formal application to the Director, Bank Supervision Department, Central Bank of Kenya in a duly completed FORM/CBK/FXD1 (can be downloaded from www.centralbank.go.ke ) attaching the following documents: 
   1. non-refundable application fee of Ksh.20,000 (bankers cheque payable to the Central Bank of Kenya);
   2. a certified copy of a statement of affairs of the applicant;
   3. a certified copy of the applicant’s memorandum and articles of association;
   4. a certified copy of the applicant’s certificate of incorporation;
   5. a feasibility study including financial projections for three years (balance sheet, profit and loss account and cash flow statements), organizational structure, physical location and postal address;
   6. bank statements of the bureau’s shareholders and directors for a period of six months prior to the date of application;
   7. duly completed fit and proper forms for the shareholders, directors and principal officers of the bureau;
   8. credit reports from a credit reference bureau for the shareholders, directors and the principal officers of the bureau;
   9. a declaration by the applicant that none of its directors and/or shareholders has ever been declared bankrupt, participated in the management of a collapsed institution, convicted by any court of competent jurisdiction in Kenya or elsewhere of a criminal offence involving fraud, money laundering, tax evasion, or any other act of dishonesty;
   10. a declaration by the applicant that none of its directors and/or shareholders holds a similar position or role in any other forex bureau;
   11. an undertaking by the applicant to comply with the provisions of the Central Bank of Kenya Act, the Regulations, the Forex Bureau Guidelines and any instructions/ directions issued by the Central Bank of Kenya regarding the establishment and operations of forex bureaus at all times; and 
   12. any other information as may be required by the Central Bank of Kenya.

The Central Bank shall within 90 days of the date of lodging the application:

1. request for additional information for purposes of processing the application;
2. where it is satisfied that all the necessary requirements have been met, issue a letter of intent to the applicant advising the applicant to;
   1. pay the licence fee of Ksh.65,000 to the Central Bank of Kenya by banker’s cheque; 
   2. transfer the non-interest bearing deposit of US$30,000 to the Central Bank of Kenya offshore account; 
   3. invite the Central Bank of Kenya to inspect the bureau’s premises prior to commencement of business.

 Upon fulfillment of the above requirements or otherwise the Central Bank shall:

3. issue a licence to the applicant; or
4. inform the applicant in writing that the application has been declined and advise the unsuccessful applicant that an appeal to the Central Bank for review of the decision to decline may be lodged within 30 days from the date thereof.  

The following key steps are followed in licensing deposit taking MFI's:-

PROCEDURE FOR LICENSING A CREDIT REFERENCE BUREAU

The following key steps are followed in starting a Credit Reference Bureau:-

1. Register a limited liability company with the Registrar of Companies.
2. Submit a duly completed application forms to the Central Bank of Kenya (CBK).
3. Documents and information to accompany the application:
• Certified copies of the applicant’s certificate of incorporation and its Memorandum and Articles of Association.
• Feasibility study by the applicant, showing the nature of the planned business.
• Duly completed “Fit and Proper” forms for proposed directors, senior officers and significant shareholders.
• Management processes including the software required for operation, characteristics of products and services to be provided to subscribers, service policies and procedures manuals, as well as the proposed security and control measures aimed at preventing misuse or improper management of information.
• Overview of operations including the description of systems and the design of the data collection including the unique identification system for individuals and enterprises.
• A description of the applicant’s proposed premises and the security measures to be adopted.
• The proposed fees structure.
• A prototype of the final product that demonstrates the principal features and functions of the system.
• A banker’s  cheque of Kshs. 10,000 payable to Central Bank of Kenya, being a  non-refundable application processing fee

Upon meeting all the above requirements, the Central Bank will grant the applicant a letter of intent (approval in principle). The approval in principle indicates the Bank’s intention to license the applicant upon meeting the pending pre-licensing requirements.

4. With the approval in principle, the applicant may proceed to obtain premises, Information Technology Systems and recruit staff for the proposed CRB.
5. Once the applicant is ready with the premises and Information Technology systems, they should invite the CBK to conduct an inspection.
6. If the inspection is satisfactory, the CBK shall notify the applicant  to submit to the Central Bank
• a bankers cheque for one hundred thousand Kenya shillings (KShs 100,000)  payable to the Central Bank of Kenya being the annual licence fee, and
• a statutory declaration in the prescribed form sworn under oath by the Chief Executive Officer of the applicant, confirming that the applicant will adhere to the provisions of the Banking (CRB) regulations 2008 and, in particular, that the applicant will not disclose to any person any information obtained pursuant to the applicant’s obligations under the Banking (CRB) Regulations 2008 except as provided therein.
7. Upon satisfactory fulfillment of the above requirements by the applicant, the CBK will then issue a licence to the applicant and place a notice in the Kenya Gazette to formally license the credit reference bureau.
8. The newly licensed credit reference bureau may then open its doors to subscribers.
9. Within thirty days of being granted the licence, the newly licensed credit reference bureau is required to submit to the Central Bank an irrevocable bank guarantee for one million shillings (Kshs 1,000,000) in a format acceptable to the Central Bank.

The following key steps are followed in licensing Representative Offices in Kenya:-