Microfinance Act


(enacted in 2006)

The Microfinance Act of 2006 regulates the provision of microfinance in Kenya. The act applies to deposit-taking institutions; parts of the act may be declared applicable to non-deposit-taking institutions in the future.

The act addresses the following topics:

  • Definitions:
    • Definitions for “deposit-taking microfinance businesses” and “non-deposit taking microfinance business” in Part I, Section 2;
  • Licensing provisions:
    • Qualifications for carrying out deposit-taking microfinance business;
    • Application, issuance, renewal, revocation and restriction of license;
  • Provisions related to governance:
    • Minimum capital requirements and minimum liquid assets;
    • Prohibited activities;
    • Application for and limits on loans and credit facilities;
    • Submission of accounts to the Central Bank;
    • Provisions regarding the appointments and qualifications of an external auditor;
  • Supervision by the Central Bank that includes:
    • Inspection of institutions;
    • The power of the Central Bank to intervene in management;
  • Protection of deposits, including:
    • Liquidation of an institution by the Central Bank;
    • Rights of the Board on insolvency;
  • Miscellaneous provisions that cover:
    • Default by officers or employees; and
    • Regulations and transitional provisions.