This archive report was first published on 30 June 2020.
On June 30, 2020, a parliamentary committee made a crucial decision that would impact the financial sector in Kenya.
The committee, responsible for finance and national planning, rejected a proposal by the Kenya Bankers Association (KBA) to reduce taxable incomes for banks.
The proposal, which aimed to align the computation of bad debts provisions for tax purposes with those of the Central Bank of Kenya (CBK), was met with resistance from the committee.
According to the committee's report, adopting the CBK's prudential guidelines for provisioning non-performing loans would result in revenue loss to the Exchequer.
The committee argued that the aggressive provisioning under CBK was meant to protect depositors, while the taxman seeks to collect revenue.
Kenya Bankers Association CEO Habil Olaka had submitted a proposal to the committee, seeking to change the income tax law to allow banks to use CBK's guidelines to account for dud loans.
However, the committee was not convinced, and the proposal was rejected.
