A non-deposit taking micro finance, also called a credit only institution is an institution that does not take cash or deposit collaterals from individuals and members. The non-deposit taking micro finance institutions are not under the Microfinance Act, and as such are not regulated by the Central Bank of Kenya. To operate in Kenya therefore, non-deposit taking micro finance institutions require minimum operating license.
Procedure of Registering a Non Deposit Taking Micro Finance in Kenya
Non-deposit taking microfinance in Kenya have to be registered as Limited Liability Private Company (“LLPC”) by the Registrar of Companies. The Registrar will only register such a company if the people registering the company have a letter of no objection from the Central Bank. Before getting registration as a LLPC, non-deposit taking microfinance institutions have to get express name and company ownership approval from the Central Bank of Kenya.
Requirements to Get a Letter of No Objection from the Central Bank by Non-Deposit Taking Micro Finance Institutions in Kenya
- A copy of name reservation of the proposed company from the Registrar of Companies certified by an advocate or by a commissioner of oaths. The proposed name should not contain the protected words “Microfinance Bank Business”, “Finance” or “Bank” or any other derivatives of these words or words indicating the transactions of financial business, unless registered under the Banking Act or the Microfinance Act.
- A copy of the registration details of the company as submitted through the e-citizen platform. The details that should be captured in this document include the names of the shareholders and the proposed activities of the proposed company, these documents of registration details must be certified by an advocate or commissioner of oaths.
- A background on the business and economic activities of the shareholders.
- A declaration by individual shareholders on the source of funds and the documentary evidence of the source of funds. These declarations must be certified by an advocate or by a commissioner of oaths.
- An affidavit confirming that the funds to be deployed are not proceeds of crime. This affidavit should be certified by an advocate or by a commissioner of oaths.
- The applicants are required to indicate whether any of the directors or the shareholders are employees or directors of any entity that is regulated by the Central Bank of Kenya.