This archive report was first published on 18 August 2019.
On August 18, 2019, the Central Bank of Kenya (CBK) gazetted rules to guide the operations of mortgage refinancing firms, allowing the Kenya Mortgage Refinancing Company (KMRC) to be licensed.
The KMRC, backed by the African Development Bank (AfDB) and World Bank, had been delayed due to a lack of permit, which had denied the firm Sh35 billion in startup capital.
The two lenders had pledged to inject $100.51 million (Sh10 billion) and $250 million (Sh25 billion) respectively into the firm.
The KMRC is expected to raise cash from sources such as bonds for lending to banks and co-operative societies using their mortgage loan contracts with customers as security, offering lenders long-term funds for cheaper mortgages.
The KMRC will operate under the capitalisation rules guiding operations of banks, requiring a minimum core capital of Sh1 billion and maintaining a minimum of 10.5 percent and 14.5 percent of total risk-weighted assets plus risk-weighted assets in core and total capital, respectively.
The CBK rules now allow the firm to issue bonds, notes and other financial instruments to raise funds to execute its objectives, with further cash coming from returns emanating from investments in government debt securities and guarantee funds.
