Investors incur higher costs on bonds platform


CBK Governor Dr Kamau Thugge speaks at a past event on September 18, 2023, at Sarova Stanley Hotel in Nairobi. PHOTO | BILLY OGADA | NMG

The Central Bank of Kenya’s new Central Securities Depository (CSD) platform has hit retail investors transferring funds to pay for government securities with new charges after changing the mode of payment to include only RTGS and Swift via commercial banks.

The biggest burden lies on those buying minimum bond values of Sh50,000, for whom the standard RTGS fee equals one percent of the value of their capital.

Most banks charge Sh500 per RTGS (Real Time Gross Settlement) transaction and up to Sh1,500 for Swift transactions, exclusive of excise duty.

Investors paying for Treasury bills and bonds previously had the option of either visiting the CBK’s banking hall, where they could pay in cash at no cost, or via a banker's cheque between Sh100 and Sh200.

The new platform, known as Dhow CSD, now requires an investor to instruct their banks to pay for successful bids out of their accounts, after providing details such as the amount, transaction reference and their CSD number.

“CBK will no longer accept cash or cheque deposits for payments of Treasury bills and bonds—all payments will be made via a commercial bank,” the CBK said in a brochure on the Dhow CSD.

The Dhow CSD went live at the end of July, bringing an end to the previous manual system of placing and paying for bids at the CBK.

Investors could also make their bids through the Treasury Mobile Direct service, which has been integrated with the new CSD system.

While the new use of wire payments for bids raises the cost of investment for bond buyers, it has the potential of easing the administrative burden on the CBK, especially in processing bankers cheques.

PAYE Tax Calculator

Note: The results are not exact but very close to the actual.