Branchless banking law changes in Kenya 'will boost access to finance'

Jan 28, 2010

Changes in the law regarding the development of branchless banking services in non-banking institutions in Kenya look set to take place.

The Central Bank of Kenya is reviewing the Banking and Microfinance Acts to allow for banking agencies to be created where non-banking firms can offer financial services on the behalf of commercial banks and microfinance institutions.

Such a move is expected to give the latter a leverage to expand their reach at a minimal cost.

According to a Business Daily Africa article, the microfinance industry will welcome the chance to extend its reach to customers in remote regions where "brick and mortar" outlets are not accessible.

Lydiah Koros, Chairperson of the Association of Microfinance Institutions, suggests the changes regarding agency banking will give many consumers access to finance.

She is quoted as saying: "The new regulation on agency banking will boost microfinance institutions as we don't have the wherewithal resources to put up branches across the country to match our rapid customer growth base."

Ms Koros also asserted that agency banking will simplify financial services through the availability of user-friendly point of sale terminals and doorstop visits.

Previously, the National Financial Access Survey of 2009 revealed that 32 per cent of the bankable population in Kenya have no access at all to financial services.