Senators Call For CBK Governor Questioning Over Collapsed Banks

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Senators in Kenya have called on the Director of Criminal Investigations to question Central Bank of Kenya (CBK) governor Patrick Njoroge and senior officials following the collapse of Chase Bank.

Chase Bank became the third lender in Kenya to go under in a nine-month period last week, casting fresh doubts over the country’s banking sector. Sh95 billion belonging to 55,000 Chase Bank customers could now be at risk and lawmakers insist they deserve to know what action regulators took to prevent its closure.

 

Senators question regulators’ actions

Members of the Senate Finance Committee have questioned the actions of CBK regulators, suggesting they could be implicated in secret lending to bank directors. An internal audit has revealed one Chase Bank director lent himself Sh9.7 billion and senators fail to see how regulators could have missed these hidden loan schemes.

“CBK does inspections regularly, sometimes monthly,” Mandera Senator Billow Kerrow said at a press conference on Monday. “It is difficult for Kenyans to imagine all these irregularities were going on without the connivance or knowledge of the regulator.”

Kerrow also says the CBK has been too quick to close banks instead of acting to save them. He insists CBK governor Patrick Njoroge and senior officials around him are partly culpable for the recent bank closures.

“Inasmuch as the directors of these banks are culpable for failing to fulfil their fiduciary responsibilities, we feel the governor has acted in a hasty and irrational manner in closing the banks. There must be a more rational way to handle this situation,” he said.

 

Depositors not considered

Nyeri Senator Mutahi Kagwe has also called for action to be taken against regulators, saying they have failed to act in the interest of depositors.

“The governor should not use a bazooka to kill a fly,” he told the press. “He is overreacting. The main concern should be on depositors. Thousands are now suffering in the streets,” he added.

“CBK should be equally held responsible. We must see action being taken against CBK officials who were in charge of these commercial banks.”

 

Featured image:

By DEMOSH from Nairobi, Kenya – Central bank, CC BY 2.0, https://commons.wikimedia.org/w/index.php?curid=41664891