MPs restrict counties accounts to CBK

Commercial banks will be the biggest losers after MPs passed amendments to the Public Finance Management (PFM) law that restricts counties to open and operate accounts at the Central Bank of Kenya or government-controlled lenders.

“All county exchequer accounts shall be opened at the Central Bank of Kenya (CBK),” section 36 of the Public Finance Management (Amendment) Bill, 2017 states.

Banks earn commissions and other transaction fees when handling huge amounts of money meant for counties.

MPs concluded debate on the Bill that will effectively compel county governments and their entities to close the multiple bank accounts they operate in commercial lenders.

The changes also require county governments and their entities to seek approval before opening and operating the accounts.

“For avoidance of doubt, all county governments’ bank accounts shall be opened at the Central Bank of Kenya except for imprest bank accounts for petty cash which shall be opened at a government-controlled or a co-operative-owned bank designated by the County Treasury,” the Bill states.

The proposed law sets out conditions that shall be considered by the County Treasury in granting approval to a county government entity to open and operate a bank account.

“Except with prior authority of the County Treasury, no accounting officer may open a bank account for the deposit, custody or withdrawal of public monies or other monies for which he or she is responsible in his or her official capacity or for the transaction of official banking business,” the bill reads.

It stipulates that the authority of the County Treasury shall be conveyed in writing to the responsible accounting officer with a copy to the Controller of Budget and the Auditor-General.

While responding to MPs contributions on the bill, Majority Leader Aden Duale who initiated debate on the proposed legislation said the plans will cure the mischief where county governments operate mysterious accounts in several banks.