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Banks see increased costs from more regulations

by biasharadigest
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Banks see increased costs from more regulations

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Central Bank of Kenya. Banks are bracing for increased costs arising from more regulations, a move they say will make services more expensive for customers. FILE PHOTO | NMG 

Banks are bracing for increased costs arising from more regulations, a move they say will make services more expensive for customers.

NCBA Group managing director John Gichora said the industry is expecting new laws in 2020, adding that customers and small lenders will be the hardest hit by the compliance costs.

He noted that part of the increased regulations have been driven by the need to address various risks including bank failures, cybercrimes and money laundering.

“The biggest issue we have today is that of legislation. Legislators are increasingly getting into the business they shouldn’t just as was with rate cap. They are fixing one problem by creating multiple others,” said Mr Gachora.

“We have become too much of a nanny state. We are trying to protect everybody by thinking all of us are here to hurt everybody else.”

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In 2020, President Uhuru Kenyatta will make a decision on whether or not to assent to the Law of Contract (Amendment) Bill 2019.

The bill seeks to insulate guarantors by compelling banks to first exhaust all avenues of enforcing their security rights against a defaulter before turning to the guarantor to recover their money.

There is also a proposal law on single treasury account which wants government to only bank with state-owned lenders.

Banks have been encouraged to centralise systems such as those meant to address money laundering, cybercrime and know-your-customer so as to cut compliance costs.

Mr Gachora, whose NCBA group was unveiled out of NIC-CBA merger, says this will be the only way to avoid “forced marriages” among small banks.

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