Money remittance providers (MRPs) will now be required to sell all daily foreign exchange currency above $100,000 (Sh14.7 million) to banks in line with the Central Bank of Kenya (CBK) order that hands advantage to lenders.
The firms, which provide cash remittance services to those living abroad and also conduct foreign exchange business, will be required to sell any hard currency amounts exceeding $100,000 only to commercial banks, in what CBK termed as a move to create a “fair and orderly” market.
“CBK has noted increased participation of MRPs in the wholesale FX [foreign exchange market] without being required to comply with the various guidelines, standards and codes of conduct that are in place,” said Gerald Nyaoma, director of bank supervision at the CBK.
The regulator has restricted the selling of foreign exchange by MRPs to customers to a maximum of $100,000 per customer per day and directed them to sell all the excess amount to banks.
“MRPs will therefore be required to only sell FX, in excess of USD 100,000 or its equivalent to commercial banks,” said Mr Nyaoma in the circular.
There are 20 institutions licensed by the CBK to conduct money remittance as well forex business, with the oldest being Dahabshill Money Transfer Limited that was licensed in November 2013.
The CBK move may limit the flow of dollars to other players such as the more than 70 foreign exchange bureaus that are regulated by the CBK or businesses and individuals seeking such money without having to go through banks.
Foreign exchange bureaus and MRPs generally offer better rates to customers compared with commercial banks.