Parliament has stripped the Central Bank of Kenya (CBK) of powers to approve the opening, relocation and closure of any branch of a mortgage refinance company.
The National Assembly annulled sections 26(2) and 42 of the Central Bank of Kenya (Mortgage Refinance Companies) Regulations, 2019.
The regulations, Central Bank Governor Patrick Njoroge developed, are intended to effect the mortgage refinance legal regime introduced to the CBK Act, Cap 491 through the Finance Act, 2018.
The Finance Act 2018 amended the CBK Act to provide for a legal framework for the CBK to license and regulate the mortgage refinance business.
The Treasury in May unveiled the Kenya Mortgage Refinancing Company (KMRC), which is expected to make it easier for banks to access long-term funds for cheaper home loans.
The company is mandated to raise debt from markets, including mortgage-backed bonds, to lend to banks and co-operatives using their mortgage loan contracts with customers as security.
The KMRC is designed to refinance primary lenders, enabling them to offer mortgage loans at single-digit rates.
Under the annulled regulations, the CBK, which published the instrument through legal notice number 134 of 2019, had given itself the power to unilaterally determine the manner in which a place of business may be opened, relocated or closed.
“The bank may provide in guidelines other forms and the manner in which a place of business may be opened, relocated or closed,” the annulled section reads.
The committee on Delegated Legislation, which approved the adoption of the regulations subject to deletion of sections 26(2) and 42 argued the two sections contravened section 13(m) of the Statutory Instruments Act as they inappropriately delegate legislative powers to the Central Bank of Kenya to issue guidelines.
“Guidelines are statutory instruments within the meaning of Section 2 of the Statutory Instruments Act and if made by CBK, must be submitted to the National for Approval,” said Gladys Shollei, who chairs the committee, in a report the House adopted before MPs went on long recess on December 6, 2019.