and to drive development in the sector. ladies and gentlemen : allow me now to briefly share with you kenya ’ s experience on innovations in the banking sector. in pursuit of the financial sector ’ s vision in the kenya ’ s bis central bankers ’ speeches development blueprint, vision 2030, cbk and the players have embraced a partnership approach. consequently, several initiatives have been undertaken over the last 4 years aimed at the three envisaged goals of stability, efficiency and financial inclusion. these initiatives include : rollout of mobile phone financial services – approval for banks to leverage on mobile phone technology to present convenience and lower costs for their customers without compromising quality of service. through mobile banking, customers are now able to perform their transactions “ anytime anywhere ”. mobile money transfer has evolved from the initial concept of transferring money from one individual to another to include other functions such as payment of utility bills, loans, salaries and for deposits mobilization. introduction of agent banking mechanism in may 2010 where banks are allowed to engage third parties to provide certain banking services. the aim is increased outreach of banks to the vast under - banked and unbanked kenyan populace by introducing “ banking beyond branches ”. it also enables banks to leverage on additional cost effective distribution channels to offer financial services. agency banking takes banking to the people unlike previously when people had to go to the banks. licensing of credit reference bureaus to collect, collate, analyse and disseminate credit information among credit providers. credit information sharing provides an opportunity for individuals and businesses to rely on their credit history ( information capital ) as an alternative form of collateral to the traditional physical collateral, to secure credit facilities from banks. individuals will also be able to use their positive credit history to negotiate for better terms and conditions from their banks. on the other hand, banks will benefit from the mechanism since it will address the problem of information asymmetry and by extension the problem of non - performing loans which has in the past threatened the stability of the banking sector. the traditional challenges of the moral hazard and adverse selections can hinder financial sector growth. licensing of deposit taking microfinance institutions ( dtms ), whose focus is the lower end of the market, which is concentrated in the rural and periurban areas. the microfinance act, 2006, which empowers cbk to licence and supervise dtms, was operationalised in 2008. formalizing the operations of dtms is expected to bring more people, especially those previously un

ssm ), 70 % of significant institutions are not listed on the markets, almost 60 % have never issued convertible instruments and almost one - quarter of them do not finance themselves with subordinated debt. allow me to focus on this important aspect of the european regulations, namely the mrel, which will foreseeably be subject to discussion in the forthcoming passage of the revised directive. 3 loss - absorption requirements ( mrel ) the stringency of the mrel requirement will be determined both by the nature of the eligible instruments and the minimum required volume thereof. regarding the nature of the eligible instruments, for the mrel to fulfil the objective of providing for the orderly absorption of losses by creditors and the recapitalisation of the bank, the eligible instruments must conceivably be consistent with the seniority of the bank ’ s liabilities as stipulated in national insolvency regulations, and they must evidence a sufficient degree of stability should the bank undergo serious difficulties. that would suggest a definition of mrel that essentially includes capital instruments plus debt instruments that have a less privileged status than deposits in the insolvency pecking order. the consideration of wholesale deposits at over one year as eligible, which is not excluded in the european commission ’ s proposal, will undoubtedly be much discussed in the legislative proceedings, given the special nature of these instruments and their debatable availability to absorb losses in a resolution process. yet at present the seniority of the liabilities as established in the regulations differs from one member state to another, specifically as regards the status of senior debt in relation to deposits. that hampers the homogeneity of mrel requirements and prevents the development of an integrated market for senior debt convertible into equity in the event of resolution. accordingly, the european commission ’ s recent proposal, which introduces a new category of senior debt instruments, subordinate to deposits, is a step in the right direction. in any event, the most critical element of the mrel - setting policy is the determination of the minimum volume of eligible liabilities and own funds. under the current regulations, within 6 / 10 the banking union, it is for the single resolution board ( srb ) to determine, case by case, this volume for all significant institutions ( which are supervised directly by the ssm ), as well as for non - significant institutions engaging in cross - border activity or whose supervision has been assumed by the ssm, following consultation with the prudential supervisor. for the moment