Agency Microfinance agents set for June

Deposit taking microfinance institutions will from June have agencies after central bank published guidelines on the opening, relocation and closure of marketing agencies and agencies. Central bank says the guidelines will increase financial services outreach in a cost effective manner especially to the unbanked without risking the safety and soundness of the financial system. Last week central bank published the Guideline on the Opening, Relocation and Closure of Marketing Offices and Agencies of Deposit Taking Microfinance Institutions. This is the 1st indication that deposit taking microfinance institutions could soon open outlets in far flung areas through third party premises. The guidelines will affect the 6 deposit taking microfinance organizations namely Faulu Kenya, REMU, Rafiki, SMEP, Uwezo and the Kenya women finance trust. The guidelines charge the board of directors of the various DTM’s with the responsibility of formulating policies, procedures and guidelines. The guidelines according to central bank should ensure that suitable lease agreements are in place, ensure sufficient facilities are in place to enable efficient provision of DTM services, ensure risks associated with carrying out deposit taking business in marketing offices or agencies are properly identified, documented and mitigated and Business activities carried out in marketing offices or agencies are constantly monitored to ensure compliance with the Microfinance Act, Regulations, this Guideline and any agreement in place. The guidelines continue that all firms wishing to participate as agencies will have to apply with the regulator with CBK replying within 30 days where it declines to approve. Those granted the approval will be expected to open shop in 90 days. The agencies will further be expected to renew licenses annually. Key responsibilities will include of the agencies and marketing institutions include maintaining an effective system of internal control. The guidelines are expected to be effective starting June 2012 according to the director of bank supervision department.