i have alluded to in my remarks in the recent past at other fora. the use of agents by banks should lower service delivery costs as they do not have to put up “ brick and mortar ” structures to expand their footprint across the country. it is the central banks ’ expectation that savings from such innovations will be passed on to customers in the form of lower charges and lending rates. as i draw to a close, i wish to briefly dwell on credit products. competition in the recent years coupled with aggressive marketing has increased personal loans by banks. as we have seen from the survey presentation this morning, the cost of credit is not just the lending rate but also includes other costs such as commitment fees, negotiation fees, legal, valuation and insurance fees. the challenge that we must then face is disclosure to consumers of the total effective cost of loans. in this regard, i would urge kba to require in its ’ code of conduct that banks disclose the total all inclusive “ annual percentage rate ” of credit facilities to enable customers make informed choices and avoid “ debt overloads ”. the recent years have produced results that we will quote for many years to come : a ) lowering barriers to entry : threshold of minimum balance, loan requirements, etc, improves access to financial services. b ) lowering transactions costs attracts potential micro - savers to banks. c ) banks can make profits in downstream activities. let me end by reiterating that the central bank remains committed to continued consumer education and sensitization on banking products and services in conjunction with banks, the media and other like minded players. we are convinced that this will bring on board more kenyans into the formal financial sector, uplifting their well being and enabling them to participate in and benefit from our national development aspirations. i thank you all once again for honouring our invitation and it is now my pleasant duty and honour to officially launch the survey on bank charges and lending rates. thank you.

cbk to recognize the payment of a return rather than interest on government securities with the aim of opening up a spectrum of shariah compliant investment in the country. similarly, section 16 of the banking act was amended to allow for payment of a return rather than interest on savings products in the banking industry. i therefore urge all the players in this sector to come up with innovative products and services so that kenya may achieve her ambition of becoming a financial hub in the region. the central bank of kenya will work with all the players in facilitating the achievement of this dream. ladies and gentlemen : sharia compliant banking, although still in its infancy in our country, has a lot of opportunity for growth. the two fully sharia compliant banks as at the end of february 2013 had a total of kshs. 15. 4 billion in loans and advances and kshs. 19. 5 billion in total deposits. furthermore, these two banks together with other conventional banks offering sharia compliant banking window had total deposits of sha. 27. 8 billion as at bis central bankers ’ speeches 31st december 2012. these numbers just show how sharia compliant banking is gradually becoming a major player in the banking sector. ladies and gentlemen : the introduction of these specialized products in the kenyan banking industry no doubt comes with its challenges. these include limited short term liquidity management products, lack of experienced human resources in this specialized banking & finance area, lack of product standardization which can be a cause of ambiguity and source of disputes to mention but a few. the central bank is currently formulating policy and regulations to regulate the sharia compliant products and therefore depart from the current practice of subjecting sharia compliant banking to conventional banking regulations. i urge all the shariah boards to work together to help find solutions or come up with suggestions on how to address these challenges. we at the central bank will be willing and happy to provide the necessary facilitation and share our views. ladies and gentlemen : the future of sharia compliant banking and finance in kenya is bright but the challenges that exist need to be tackled collectively. i urge all players in the sharia compliant banking to embrace the spirit of cooperation and competition as they come up with ways of product and service standardization. kenya has pioneered in sharia compliant banking in this region but other countries in the region are headed in that direction, with tanzania already having two fully sharia compliant banks. somalia is another country keen on modeling its emerging financial system predominantly along sharia compliance as it rec