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’’ from CBK.
2. Once CBK has approved the name apply to the Registrar of Companies for incorporation of the proposed bank as a limited liability company.
3. Upon incorporation of the limited liability company apply to CBK for a banking 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 bank.
5. You should also provide evidence of your source of capital to start the bank. This may be in the form of bank statements or evidence that you hold this amount in government securities such as treasury bills and bonds. Currently a minimum capital of Shs.350 million is required to start a bank.
6. With this approval, you may proceed to obtain premises, Information Technology Systems and recruit staff for the bank.
7. Once you are ready with your premises, invite the Central Bank to conduct an inspection.
8. If the inspection is satisfactory, the Central Bank places a notice in the Kenya Gazette to formally license the bank.
9. 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 appropriate name with the Registrar of Companies and write to the Central Bank to seek approval for the name.
2. After the name has been approved by the Central Bank, register the company and then make a formal application (Form CBK/FXD/1 ) to the Central Bank attaching the following documents:-
   i). Certified copy of Certificate of Incorporation and of Memorandum and Articles of Association;
   ii). A feasibility study of the proposed forex bureau including Financial projections for three years (balance sheet, profit and loss and cash flow statements), organisational structure, physical location and address;
   iii). Particulars and ‘fit and proper forms’ of proposed shareholders and directors;
   iv). Declaration and confirmation that no shareholder and/or director has a similar position or role in any other forex bureau in Kenya;
   v). Provide evidence of non-interest bearing deposit of US$ 30,000 and core capital of US$ 30,000; and
   vi). Pay a non-refundable application fee of KShs. 10,000 payable to the Central Bank of Kenya by banker’s cheque.

3. Upon assessment and fulfilment of the above, the Central Bank will issue a Letter of Intent, which advises the applicant on the next steps and requirements to be fulfilled before issuance of a licence and approval to commence operations in the second stage, which include:-
   i. Pay a license fee of KShs. 65,000 to the Central Bank of Kenya by banker’s cheque;
   ii. Remit US$ 30,000 to the Central Bank of Kenya offshore account being non-interest bearing deposit (account number provided upon request);
   iii. Prepare premises for inspection by the Central Bank in accordance with the standards in the Guidelines; and
   iv. Present your proposed Principal and Assistant Principal Officers to the Central Bank of Kenya for interview and approval.
   
4. Once an applicant fulfils the entire requirements, the Central Bank shall issue the applicant with a licence and approval to commence operations of the forex bureau business in Kenya.

Procedure for licensing Deposit Taking Micro finance Institutions

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

1. Propose and book at least three business names with the Registrar of Companies and Business Names and submit to the Central Bank before incorporation.
2. Incorporate the words ‘Deposit Taking Microfinance’ or the acronym “DTM” in the proposed business names.
3. Once name is approved, complete and Submit the Application Form to CBK including supporting documentation which include:
   i. Provide evidence of minimum capital:
   • Nationwide deposit-taking MFIs to operate countrywide - KShs.60 million ;
   • Community deposit-taking MFIs to operate within a Government administrative District, or Division if it operates in a city - KShs.20 million
   ii. Prepare and submit a comprehensive feasibility study and business plan
   iii. Duly complete and submit the `Fit and Proper Forms’ for all significant shareholders (at least 10% shareholding) accompanied by supporting documentation.

   N/B: In the case of entities incorporated outside Kenya, provide notarized copies of the documents in lieu of certified copies.
   

4. Transforming entities/ organisations will provide additional requirements, including:
   i. Board and Annual General meeting resolution approving the transformation and the proposed investment (Business Plan).
   ii. A copy of audited financial statements for at least the last three years preceding the application including the auditor’s report, if applicable.
   iii. A due diligence report prepared by an external audit firm on the operational and financial performance detailing a review of the adequacy of the management information system and internal control systems.
   
5. Foreign companies intending to set up a local subsidiary will further provide:
   i. A copy of the board resolution authorizing the entity to invest in the deposit-taking business in Kenya, and the designated persons who will represent the business in connection therewith;
   ii. Historical background of the foreign entity
   iii. Signed declaration by the board of directors to adhere to the Act and Regulations and other relevant Kenyan Laws at all times during the validity of the licence; and
   iv. Endorsement letter from the home supervisory authority
   
6. Upon assessment and fulfillment of the above, the Central Bank will issue a Letter of Intent and advise the applicant on the next requirements to be fulfilled before issuance of a licence and approval to commence operations, including:-
   i. Paying of licence fee to the Central Bank by banker’s cheque.
   ii. Preparing of premises for inspection by the Central Bank for approval before commencement of operations.
   iii. Duly completing and submitting the Fit and Proper Forms for all officers accompanied by all the supporting documentation.
   iv. Preparing and putting in place structures and systems to operationalize the business
   

Procedure for licensing a Credit Reference Bureau

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

1. Register a company with the Registrar of Companies.
2. Submit a duly completed application to the Central Bank of Kenya(CBK) in the prescribed form which can be downloaded from the CBK website
3. c. Documents and information to accompany the application:
   i. Certified copies of the applicant’s certificate of incorporation and its Memorandum and Articles of Association.
   ii. Feasibility study by the applicant, showing the nature of the planned business, organizational structure and internal control systems and monitoring procedures of the company.
   iii. Sworn declarations of proposed directors, senior officers and significant shareholders. The declaration forms can be downloaded from the CBK website,www.centralbank.go.ke.
   iv. Management processes, including the software required for operation, characteristics of products and services to be provided to subscribers, service policies and procedures manuals, and proposed security and control measures aimed at preventing misuse or improper management of information.
   v. Overview of operations including the description of systems and the design of the data collection including the unique identification system for individuals and enterprises.
   vi. A description of the applicant’s premises and the security measures to be adopted.
   vii. The proposed fees structure.
   viii. A prototype of the final product that demonstrates the principal features and functions of the system.
   ix. A banker’s cheque of Kshs. 10,000 payable to CBK, being non-refundable application processing fee.
   
4. Upon meeting all the requirements, the Central Bank will grant you written approval to conduct credit reference bureau business.
5. With this approval, you may proceed to obtain premises, Information Technology Systems and recruit staff for the bank.
6. Once you are ready with your premises and Information Technology systems, invite the CBK to conduct an inspection.
7. If the inspection is satisfactory, the CBK places a notice in the Kenya Gazette to formally license the credit reference bureau.
8. A license is then issued and you can open your doors to subscribers.

Director, Bank Supervision
Central Bank of Kenya
P.O. Box 60000 00200 NAIROBI
Tel: 2863005
Email: fin@centralbank.go.ke