Via a legal alert from Oraro & Company Advocates: The Finance Act, 2018 which was assented to on September 21, 2018, amended the Central Bank of Kenya (CBK) Act, 1966 to regulate Mortgage Finance Businesses (the business). The amendments include having new definitions and the introduction of new powers to the CBK. These amendments came into effect on 1st October, 2018.
- A Mortgage Refinance Business is defined as the business of providing long-term financing to primary mortgage lenders for housing finance and any other activity that the bank may prescribe from time to time;
- Mortgage Refinance Company means a non deposit-taking company established under the Companies Act of 2015 and licensed by the CBK to conduct mortgage refinance business;
- Specified Mortgage Refinance Company means a licensed mortgage refinance company licensed under the CBK Act.
Increased CBK powers
With the introduction of new sections, CBK will now have the power to license and supervise the business. This includes:
- Determining capital adequacy requirements;
- Prescribe minimum liquidity requirements and permissible investments for the business;
- Supervise the business by conducting both on and off-site supervision;
- Assess the professional capacities of persons managing the business;
- Approving the board management of the business;
- Approving the appointment of external auditors;
- Collecting regular data from the business;
- Approving the annual audited accounts of the business before publication and presentation at the AGM;
- Revoke or suspend a license;
- Receiving reports from the Mortgage Refinance Business.
These are extracts from other documents from Oraro & Company with detailed implications of the passing and presidential assent of the Finance Bill 2018.