Banking Services

The Central Bank of Kenya was established in 1966 to, amongst other functions, act as banker to the Government as stipulated under Section 4(a) of the Central Bank of Kenya Act Cap 491.

CBK Act CAP 491 states as follows:

4A. (1) Without prejudice to the generality of section 4 the Bank shall:

(a) formulate and implement foreign exchange policy;

(b) hold and manage its foreign exchange reserves;

(c) license and supervise authorised dealers;

(d) formulate and implement such policies as best promote the establishment, regulation and supervision of efficient and effective payment, clearing and settlement systems;

(e) Act as banker and adviser to, and as fiscal agent of the Government; and

(f) Issue currency notes and coins

In subsection (1) (d), “clearing” means the process of transmitting, reconciling and confirming payments prior to settlement, including the netting of payments and the establishment of net positions for settlement; “payment system” means a system of instruments, procedures and rules for the transfer of funds among system participants; “settlement” means an act that discharges financial obligations between two or more parties.

The Central Bank of Kenya maintains various accounts for Government Ministries, which include:

•    Recurrent Accounts
•    Development Accounts
•    Deposit Accounts
•    Projects Accounts
•    Donor funded Accounts
•    Treasury Accounts

Public Entities accounts i.e.,

•    Parastatals

Government Departments that hold accounts in the Central Bank for purposes of funding by the Exchequer Accounts include

•    The Judiciary
•    Public Prosecution
•    Kenya Anti-Corruption Commission (KACC)
•    Independent Electoral and Boundaries Commission (IEBC)
•    Teachers Service Commission (TSC)
•    Public Service Commission of Kenya
•    Commission on Revenue Allocation (CRA)
•    Truth, Justice and Reconciliation Commission (TJRC)
•    Parliamentary Service Commission (PSC)

As a government agency, the Kenya Revenue Authority (KRA) houses its main tax collection accounts at the Central Bank. While select commercial banks are authorised to hold collection accounts on behalf of KRA, allowing the general public to conveniently make tax payments, money collected in those accounts is deposited into the main accounts at the Central Bank.
Because the tax collection accounts are held at the Central Bank, funds deposited into the accounts cannot be interfered with. Once payments are deposited into the KRA accounts, they can only be transferred with permission from The National Treasury.

Management of Kenya Revenue Authority Accounts

The Central Bank holds the following categories of accounts for Kenya Revenue Authority:

•    Tax Collection Accounts – These accounts contain all main tax collection accounts.
•    Tax Refunds Accounts – These accounts are used by KRA to make refunds to tax payers who either have overpaid tax, or have paid while they are exempted from paying.
•    Agency Collection Accounts – the KRA Act allows the Authority to act as an agent for body corporates, including to collect revenues on their behalf for the purpose of achieving economies of scale.

For this reason a number of government agencies have appointed KRA their agent for collecting revenue due to them.

On a daily basis, balances in the tax collection accounts are given to the National Treasury to enable them make timely decisions on revenue allocations for voted expenditure.

The East African Community (EAC) is the regional inter-governmental organisation grouping the Republics of Burundi, Kenya, Rwanda, Tanzania, and Uganda with its headquarters in Arusha, Tanzania. The Treaty for Establishment of the East African Community was signed on Nov. 30, 1999, and entered into force on July 7, 2000, following its ratification by the original three partner states – Kenya, Tanzania and Uganda.

The Republics of Rwanda and Burundi acceded to the EAC Treaty on June 18, 2007, and became full Members of the Community with effect from July 1, 2007.

The Central Bank of Kenya provides the following services for the EAC Central banks:

•    Maintenance of EAC Central Banks’ A/Cs
•    Facilitating of payment instructions
•    Confirmation of balances in their accounts held at The Central Bank of Kenya
•    Provision of Specimen Signature Mandate cards for nomination and authorisation of A/C