Home » Explain Service Offered to Commercial Banks by the Central Bank of Kenya

Explain Service Offered to Commercial Banks by the Central Bank of Kenya

by Infolinks Team
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The Central Bank is the banker for the government, encompassing the national government, government ministries, departments & agencies (MDA’S) and county governments. These institutions hold a variety of accounts with the Central Bank, depending on their needs, which allow them to receive deposits and make payments. The Central Bank monitors these accounts to ensure that the institutions aren’t at risk of overdraft, and also advises the institutions on financial matters.
Banking Services

Banking Services to the Government

The Central Bank is the banker for the government, encompassing the national government, government ministries, parastatals and county governments. These institutions hold a variety of accounts with the Central Bank, depending on their needs, which allow them to receive deposits and make payments. The Central Bank monitors these accounts to ensure that the institutions aren’t at risk of overdraft, and also advises the institutions on financial matters.


Services to the Government

Kenya Revenue Authority

As a parastatal, the Kenya Revenue Authority (KRA) houses its main tax collection account at the Central Bank. While select commercial banks are authorised to hold collection accounts on behalf of KRA, allowing the general public to conveniently make tax payments, money collected in those accounts is deposited into the main account at the Central Bank.

Because the tax collection account is held at the Central Bank, funds deposited into the account cannot be interfered with. Once payments are deposited into the KRA account, they can only be transferred with permission from the Ministry of Finance.

Management of Kenya Revenue Authority Accounts

Banking Services to the County Governments

The County Governments, which comprise the County Executives and County Assemblies also maintain various accounts at the Central Bank of Kenya which include:

  1. Recurrent Accounts
  2. Development Accounts
  3. Deposit Accounts
  4. County Projects Accounts
  5. County Assembly Accounts

These accounts are used to facilitate receipt and payment of funds in accordance with the Public Finance Management Act.

Banking Services to Commercial Banks and Microfinance Banks

The Central Bank provides the following services to Commercial Banks:

  1. Maintains accounts to enable commercial banks to effect and receive payments from other commercial banks, the government and other external financial institutions in Kenya shillings and foreign currency.
  2. Provides a Real Time Gross Settlement (RTGS) system to enable commercial banks settle their interbank obligations on a real time basis.
  3. Provides liquidity through the Intra-day Liquidity Facility (ILF) and the Overnight Loan Facility. These loans are secured by government securities.
  4. Hosts the Kenya Bankers Association’s Automated Clearing House (ACH).
  5. Facilitates completion of commercial banks and microfinance banks external audits by providing confirmation of balances in their clearing accounts and cash reserve ratio accounts in our books to their external auditors.
  6. Provision of the Daily Interbank Money Market Report, this is a summary of daily borrowings among commercial banks in the interbank market and guides the industry in pricing interbank loans.

Banking Services to the East African Community

The Central Bank also provides some services for the East African Community currently comprising of Kenya, Uganda, Tanzania, Rwanda and Burundi, facilitating payments, including the exchange of currencies, between countries.

Services to East Africa

Internet Banking

The Central Bank offers Internet Banking services to government ministries, departments & agencies, County Executives & County Assemblies, as well as Commercial & Micro-Finance Banksallowing them to monitor and manage their accounts online.

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