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The Central Bank of Kenya announced it was in final stages of licensing two banks, in first step to lifting the November 2015 indefinite suspension on issuing new licences.

The regulator said it will be issuing permits to DIB Bank Kenya, which is owned by Dubai Islamic Bank, and Mayfair Bank which is owned by Kenyan investors.

The two firms had received an “approval in principle” before the indefinite suspension of new banks, the CBK said in a statement.

“The Central Bank of Kenya announces its intention to finalise the processing of licence applications for two institutions that had already been granted an “approval in principle”, as a first step to lifting the moratorium on licensing of new commercial banks,” CBK said in a press statement.

CBK suspended the licensing of new banks on November 17, 2015 saying it needed to strengthen oversight, weeks after two banks- Imperial and a Dubai bank were placed under receivership.

The moratorium reportedly stalled entry of international banks into the country, where in the last 16 months, commercial banks have come under closer scrutiny from the regulator because of increasing bad debts.

DIB, the largest Islamic bank in the United Arab Emirates, is reported to have already recruited staff for its Kenyan operation, which will initially comprise three branches offering consumer, corporate and treasury services.

DIB Bank Kenya Limited (in formation) is a wholly owned subsidiary of the Dubai Islamic Bank PJSC, a leading sharia compliant bank in the UAE.

Mayfair Bank Limited (in formation) is owned by a diverse group of Kenyan investors with interests in various sectors.

“The entry of these banks on the fulfillment of all the pre-licensing conditions will expand the range of banks’ business models and underscore Kenya’s growing stature as a regional financial services hub,” CBK said.

DIB will join the First Community Bank, Gulf and Sharjah Islamic Bank in offering islamic banking services in the country, where Muslims account for about 10 per cent of the population of about 44 million.

CBK governor Patrick Njoroge had in November 2016, signaled the lifting of the moratorium.

Njoroge said the local banking sector has made huge improvements over the past year, adding that CBK’s supervision department has improved its monitoring capacity.

“We have made huge improvements so far and I am glad to say that the moratorium will be lifted very soon,” he said during a press briefing.

Kenya has one of the highest ratio of banks relative to population in the world. There are 41 banks – including a mortgage financier , putting the ratio at 0.93 or simply one bank for every 1.07 million people.

Re-disseminated by The Asian Banker from The Star