Why banks lean towards high liquidity

A customer is served at a bank branch. FILE PHOTO | NMG

Kenyan banks are known to make super normal profits with the industry generally characterised as healthy. Many have asked why these banks hold high liquidity levels and avoid lending to the public.

Treasury Principal Secretary is the latest entrant in this conversation, accusing banks of holding liquidity more than the statutory requirement, saying their liquidity ratio stands at 51 percent against the 20 percent statutory requirement.

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