Kenya’s central financial institution is in search of powers to take over struggling fee firms and promote their companies, increasing the regulator’s position in defending buyer cash when suppliers run into hassle.
The draft National Payment System Bill, 2026, would permit the Central Bank of Kenya (CBK) to intervene when a supplier fails to meet its obligations to prospects or different monetary establishments, breaches regulatory necessities, or threatens monetary stability.
The measures might put CBK on the centre of resolving failures in an business the place prospects depend on personal firms to maintain and transfer their cash. It might drive service suppliers and their traders to give up management of a troubled enterprise earlier than it reaches liquidation, with CBK deciding who runs it and appointing a statutory supervisor to promote it.
“The Central Bank may intervene in the management of a payment service provider or a payment system operator where … the payment service provider or payment system operator fails to meet its obligations to customers,” the draft invoice states.
An organization that fails to adjust to a regulatory directive might additionally face motion, whereas CBK might intervene throughout a disaster to shield monetary stability and public confidence.
That would give the regulator room to act whereas a enterprise nonetheless has belongings and operations price preserving. In funds, a supplier’s incapability to settle its obligations can have an effect on retailers awaiting gross sales proceeds, prospects making transfers, and different establishments anticipating fee.
CBK appointing officers
The proposal additionally permits CBK to take away firm officers it deems accountable for an organization’s deterioration, appoint a director who can’t be dismissed with out its approval, and cease the agency from taking up new fee enterprise or brokers.
“All the powers of the directors, significant shareholders, senior officers or trustees” would stop on the supervisor’s appointment, besides the place the supervisor permitted them to proceed, the draft says.
Such restrictions might restrict the quantity of extra buyer cash uncovered to a troubled supplier. They might additionally depart its house owners with little affect over how the corporate responds to its troubles.
While the proposal locations the safety of buyer cash on the centre of any intervention, it doesn’t assure uninterrupted entry to funds. A statutory supervisor might droop funds to prospects and different collectors whereas managing the corporate’s affairs.
CBK has intervened in a fee firm earlier than. In October 2021, it revoked the authorisation of Mobile Pay, which operated beneath the Tangaza model, citing regulatory breaches that put buyer funds in danger. According to the regulator, the corporate failed to submit audited accounts for its enterprise and belief fund, in addition to safety audits and different reviews.
The proposed regulation would construct on these powers with an in depth statutory administration regime, together with provisions for changing administration and promoting a supplier’s enterprise.
CBK has exercised comparable powers within the banking business over the previous decade. It positioned Imperial Bank into receivership in October 2015 and introduced its liquidation in December 2021.
Chase Bank, which entered receivership in April 2016, reopened that month under KCB’s management. In 2018, a deal transferred 75% of the value of its deposits to SBM Bank, earlier than the remaining enterprise went into liquidation in 2021. The interventions present the choices accessible to the regulator.
The proposal, which can repeal and change the National Payment System Act of 2011, will now permit the registration and licensing of fintech startups to resolve a legal grey area that has slowed the enlargement of fintechs within the nation, permitting business banks and telcos to dominate.
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