Section 33 of The Banking Act CAP 488: Powers of Central Bank to advise and direct

(1) If, at any time, the Central Bank has reason to believe that—
(a) the business of an institution is being conducted in a manner contrary to or not in compliance with the requirements of this Act or of any regulations made thereunder or in any manner detrimental to or not in the best interests of its depositors or members of the public; or
(b) an institution, any of its officers or other person participating in the general management of the institution is engaged in any practice likely to occasion a contravention of any of the provisions of this Act or any regulations made thereunder, the Central Bank may—
(i) give advice and make recommendations to the institution with regard to the conduct of its business generally;
(ii) issue directions regarding measures to be taken to improve the management or business methods of the institution or to secure or improve compliance with the requirements of this Act, any regulations made thereunder or any other written law or regulations;
(iii) in any case to which paragraph (b) applies, issue directions to the institution, officer or other person to cease such practice;
(iv) appoint a person, suitably qualified and competent in the opinion of the Central Bank, to advise and assist the institution generally or for the purposes of implementing any directions under subparagraphs (ii) and (iii) and the advice of a person so appointed shall have the same force and effect as a direction made under subparagraphs (ii) and
(iii) and shall be deemed to be a direction of the Central Bank under this section.
(1A) If the Central Bank determines—
(a) that any member of a group other than an institution has committed any violation of this Act; or
(b) that the activities of any such member are having a detrimental impact on the institution or may jeopardize the interest of depositors, the Central Bank may direct the member to eliminate such irregularities within such period as it may determine.
(1B) The Central Bank may appoint a competent authority from amongst the bodies set out in the Third Schedule or any other entity with expertise in the relevant field to carry out the enforcement of the direction issued under subsection (1A).
(1C) The Central Bank may, in addition to the actions specified under subsection (1B), further direct the concerned party to—
(a) suspend any further investment by the institution in a subsidiary company;
(b) suspend the exercise of a non-operating holding company’s control of the institution;
(c) suspend transactions between any associated entity and the institution; or
(d) suspend participation of any person in the affairs of the institution.
(2) The Central Bank shall, before issuing a direction under subsection (1), serve upon the institution, officer or other person, a notice of such intent specifying the reasons therefor and requiring the institution, officer or other persons, within such period as may be specified in the notice, to show
cause why such direction should not be issued.
(3) An institution which receives a direction under the provisions of this section shall comply with the direction within such period as may be specified in the direction and, if so required, shall produce evidence that it has done so.
(4) The Central Bank may issue directions to institutions generally for the better carrying out of its functions under this Act and in particular, with respect to—
(a) the standards to be adhered to by an institution in the conduct of its business in Kenya or in any country where a branch or subsidiary of the institution is located; and
(b) guidelines to be adhered to by institutions in order to maintain a stable and efficient banking and financial system.
(5) A person who fails to comply with any direction under this section commits an offence and shall, in addition to the penalty prescribed under section 49, be liable to such additional penalty as may be prescribed, for each day or part thereof during which the offence continues.

More Sections

Section 33A - Powers upon audit or inspection report

Where an auditor's report under section 24(4) or an inspection report under this Part reveals that an institution conducts its business in a manner contrary to the provisions of this Act, or in any...

Section 33C - Power of Central Bank to prescribe conditions on deposits or withdrawals

(1) The Central Bank shall prescribe, in regulations, conditions on deposits or withdrawals by customers in banks and financial institution. (2) The Central Bank shall within thirty days of coming...

Section 33D - Powers on anti-money laundering, combating the financing of terrorism and countering proliferation financing matters

(1) Pursuant to sections 2A, 36A, 36B and 36C of the Proceeds of Crime and Anti-Money Laundering Act (Cap. 59A), the Central Bank shall regulate, supervise and enforce compliance for anti-money...

Section 33E - Penalties for violations relating to money laundering, terrorism financing

(1) No institution, director, officer, employer, agent or any other person shall violate or fail to comply with any provision of the Proceeds of Crime and Anti-Money Laundering Act (Cap. 59A), or any...

Section 34 - Powers of Central Bank to intervene in management

(1) This section applies, and the powers conferred by subsection (2) may be exercised, in the following circumstances— (a) if the institution fails to meet any financial obligation, when it falls due...

Section 34A - Voluntary liquidation

(1) An institution may, with the approval of the Central Bank, voluntarily liquidate itself if it is able to meet all its liabilities. (2) An application for the Central Bank’s approval for the...

Section 35 - Liquidation of insolvent institutions

(1) If satisfied on reasonable grounds that an institution has become insolvent, the Central Bank may appoint the Board to be a liquidator of the institution. (2) Such an appointment has the same...

Section 35B - Power to place institutions in administration in certain circumstances

(1) The Central Bank may appoint the Board as administrator to manage to manage the institution's affairs and property, but only it is satisfied that— (a) the institution is or is, likely to become...

Section 35C - Right of appeal in respect of Board's exercise of powers under section 35

(1) Any interested person who is dissatisfied with the exercise by the Board of a power conferred on it by section 35 may apply to the High Court for an order or orders under subsection (2). (2) On...

Section 35D - Offences under sections 35 and 35B

(1) A person who— (a) refuses or fails to comply with a requirement of a liquidator appointed under section 35, or of an administrator appointed under section 35B, that is applicable to the person,...

Section 40A - Rights of assignment

(1) The liquidator may assign the assets or liabilities of an institution or of a customer under this Act, the Insolvency Act (Cap. 53), or under any other written law to third parties for the benefit...

Section 43 - Representative offices of foreign institutions

(1) The Central Bank may, in writing and subject to such conditions as the Central Bank may consider necessary, authorize a bank or a financial institution incorporated outside Kenya which does not...

Section 44 - Restrictions on increase in bank charges

No institution shall increase its rate of banking or other charges except with the prior approval of the Cabinet Secretary.

Section 44A - Limit on interest recovered on defaulted loans

(1) An institution shall be limited in what it may recover from a debtor with respect to a nonperforming loan to the maximum amount under subsection (2). (2) The maximum amount referred to in...

Section 45 - Cabinet Secretary to consult with the Central Bank

(1) The Cabinet Secretary shall consult with the Central Bank in the exercise of his functions under this Act. (2) Where the approval of the Cabinet Secretary is required under any provision of this...

Section 46 - Bank holidays

(1) Where the Cabinet Secretary considers that it is in the public interest that banks, or a particular bank, or a particular branch of a bank, should remain closed on a day which is not a public...

Section 47 - Orders by High Court

(1) The High Court, on application made ex parte by the Cabinet Secretary or, where a manager or liquidator has been appointed by the Central Bank, may, if it considers it to be in the interests of...

Section 48 - Disqualification of officers

(1) A person who is an officer of an institution shall cease to hold office and shall not thereafter be eligible to hold office in any institution if he— (a) becomes bankrupt or suspends payment or...

Section 49 - Penalties for offences

Where any institution or other person contravenes any of the provisions of this Act— (a) if it is a body corporate, it shall be guilty of an offence and liable to a fine not exceeding one hundred...

Section 50 - Penalties for default by officers

(1) Any officer of an institution who— (a) fails to take all reasonable steps to secure the compliance of the institution with this Act; or (b) fails to take all reasonable steps to secure the...

Section 51 - Misleading advertisement for deposits

(1) Any institution or other person who issues any advertisement, brochure, circular or other document inviting any person to make a deposit which— (a) falsely represents that he is authorized to...

Section 52 - Civil obligations

(1) For the avoidance of doubt, no contravention of the provisions of this Act or the Central Bank of Kenya Act (Cap. 491) shall affect or invalidate in any way any contractual obligation between an...

Section 52A - Act to prevail in event of conflict

(1) Subject to subsection (2), where there is a conflict between the provisions of this Act and the provisions of any other written law applicable to an institution licensed under this Act, the...

Section 53 - Exemptions

(1) The Cabinet Secretary may, by notice in the Gazette, exempt an institution from the provisions of section 12, 13 or 14 subject to such conditions as the Cabinet Secretary considers necessary. (2)...

Section 54 - Act not to apply to certain institutions

(1) This Act does not apply to— (a) the Kenya Post Office Savings Bank established under the Kenya Post Office Savings Bank Act (Cap. 493B); (b) the Agricultural Finance Corporation established...

Section 54A - Rights and fundamental freedoms

All persons subject to this Act shall enjoy all rights and fundamental freedoms enshrined in the Constitution unless limited to the extent specified in Article 24 of the Constitution, this Act or any...

Section 54B - Limitation of right to privacy

(1) The right to privacy guaranteed under Article 31 of the Constitution is hereby limited under Article 24 of the Constitution only to the nature and extent contemplated under subsection (2). (2)...

Section 55 - Regulations

(1) The Central Bank may make regulations generally for carrying out the purposes and provisions of this Act. (2) Without prejudice to the generality of subsection (1), the Central Bank may, in...

Section 56 - Repeal and savings

(1) The Banking Act (No. 56 of 1968) is repealed. (2) Notwithstanding subsection (1), whereupon the commencement of this Act any bank or financial institution is licensed to transact banking business...

Section 57 - Amendments of other laws

The several written laws specified in the first column of the Second Schedule are amended, in relation to the provisions thereof specified in the second column, in the manner specified in the third...

Back to Kenya Acts