CENTRAL BANK OF KENYA
Remarks by
PROF. NJUGUNA NDUNG’U
GOVERNOR
BBAANNKK OOFF IINNDDIIAA,, KKEENNYYAA BBRRAANNCCHH
Hotel Panafric, Nairobi
Friday April 12, 2013
Mrs. V.R. Iyer, the Chairperson and Managing Director of Bank of
India;

Dr. Manu Chandaria, Chairman, Bank of India Local Advisory
Committee;
Mr. R.K. Verma, Chief Executive, Bank of India, Kenya;
The Local Advisory Committee Members;
Management and Staff of Bank of India, Kenya;
Distinguished Guests;
Ladies and Gentlemen: I am delighted to join you on this auspicious
occasion to celebrate the Diamond Jubilee of Bank of India’s operations in
Kenya. As the regulator for the banking sector, Central Bank is pleased to be
associated with the achievements of the banks we regulate, particularly where
these developments lead to increased access to banking services for the
Kenyan public. In this regard, Bank of India, Kenya certainly has made its
mark on the Kenyan market.
Ladies and Gentlemen: Bank of India, Kenya Branch, was established in
Mombasa in 1953, it has four branches. With regard to its performance, I note
that as at February 2013, the bank had a total asset base of Ksh.27 billion. Net
Loans and Advances stood at Ksh.11.5 billion while customer deposits were
Ksh.20.8 billion, supported by a core capital base of Ksh.3.9 billion. The bank
returned a profit before tax of Ksh.568.4 million for the year ended December
2012. This impressive performance of Bank of India is consistent with the
continued commendable performance of Kenya’s banking industry.
Ladies and Gentlemen: The banking sector and the totality of the financial
sector is very important to the economy. Let me share with you some key
highlights of the Banking Industry’s performance for the last 10 years that is
the period 2002 to December 2012 to consolidate the importance of the
banking sector in the Kenyan economy:
• Assets grew from Ksh.456.7 billion to Ksh.2.35 trillion;

• Total deposits grew from Ksh.360.6 billion to Ksh.1.76 trillion.
• Net advances increased from Ksh.222.8 billion to Ksh.1.27 trillion,
• Profit before tax of Ksh.5.8 billion increased to Ksh.107 billion.
• The number of bank accounts has increased from 1.9 million accounts to 17.6
million.
Deposit insurance has evolved to cover fully 94% of the total deposit
accounts.
This phenomenal growth has been supported by the expansion of banks into
new market segments, prudent risk management and enhanced economic
prospects underpinned by a stable macroeconomic environment. The Central
Bank expects the banking sector to continue on this growth trajectory.
Ongoing reforms and initiatives by the Government and CBK will serve to
further propel the banking sector to new frontiers of financial inclusion for
more Kenyans to access these services.
Ladies and Gentlemen: Kenya’s financial industry is currently one of the
fastest growing not only in the East African region but in the continent. The
Government is committed to the implementation of sound policies towards
financial deepening and overall economic development of this country as
captured in Vision 2030. It goes without saying that the banking industry is
and will remain a major player towards this end.
Ladies and Gentlemen: We need now to concentrate on reducing costs of
doing business for banks so that we can bring down costs of financial services.
For example, the recently introduced credit information sharing platform has
enabled banks via reduced risk, to extend more credit to productive sectors
boosting wealth and employment creation. The information sharing platform
will support development of Information Capital as a new collateral
technology in the market and reduce the information search costs and hence
the risk premium over-load in the lending rates. In addition, the introduction
of positive information sharing with Credit Reference Bureaus will allow good
debtors to leverage on this and bargain for lower costs of borrowing.
The second area in reducing cost of doing business is the cost of rolling out
branch networks to reach Kenyans cost-effectively. This has worked and will

continue to work well with the introduction of Agent Banking. The CBK has so
far licensed 16,333 Agents since the roll out in May 2010.
The third area that has lowered the cost of doing business is banks introducing
innovative products to the market by leveraging on advanced technology and
the mobile phone financial services platform. Lower cost on these products
has ensured uptake and volumes have grown. Finally, the currency centres
have helped to de-congest services at the branch and headquarters of CBK and
physical distances, lowering costs for banks.
In addition, the Central Bank will continue more forcefully with its four
dimensional approach: Advise; Cultivate Partnership; Agent of
Development, but also a Regulator. This approach will ensure
innovative policies that work for the market and ensure financial inclusion for
all Kenyans, lower unit cost of financial services and also ensure the market
stability.
Ladies and Gentlemen: In conclusion, I would like to assure the banking
sector and other market players that the Central Bank will continue to support
the market development by providing an enabling environment for growth in
the banking sector. We shall continue to ensure that the sector operates
efficiently, effectively and soundly, supported by the following three pillars:-
First, strengthening Financial Stability, through a robust Supervisory
and Regulatory Framework. In this regard, the Central Bank has
adopted a consolidated supervision approach to take cognizance of the
growing pan-African nature of the Kenyan banking sector – and where
applicable, supervisory colleges will be used.
Second, enhancing Financial Integrity in the Banking Sector so as to
ensure that the financial systems are safeguarded against money
laundering and financing of terrorism in line with international best
practice.

Third, promoting Financial Inclusion for financial deepening and
development in line with the aspirations under the Kenyan Vision 2030.
We expect banks to strengthen their screening and monitoring role of their
clients, new or potential ones for market development. The Kenyan Bank of
India should take advantage of the market vibrancy as well as initiatives put
forth by the Central Bank to grow its market share even further in the coming
years.
Ladies and Gentlemen: with these few remarks, let me once again applaud
the Kenyan Bank of India, as you celebrate your Diamond Jubilee and wish the
bank continued prosperity in the years to come – not only in Kenya but also in
the East African Community region.
Thank You and God bless you all