The Central Bank of Kenya has released a draft proposal to have independent money remittance providers (MRPs) licensed. CBK has developed draft Regulations on International Money Remittance Business to be issued to key stakeholders for public comments. Currently, money remittance services are offered through commercial banks and other agents appointed dealers approved by CBK.

The need

Central Bank says this has been informed by the need to reduce barriers and lower the cost of sending and receiving money, increase transparency, foster competition, enhance innovations and increase access to money remittance products and services by the low income earners. The regulator also says there is need to create an enabling environment to increase the flows of remittances through formal financial delivery channels.

The remittance service providers, according to the draft will be established and incorporated as limited liability companies under the Companies Act with their business name incorporating the words 'Money Remittance Provider‛.

Upon approval of the proposed business name by CBK the applicant will be required to have proof of a minimum core capital of not less than KES 20,000,000 before commencement of operations, a balance which should be maintained at all times during business.

[Read : Why Finance players are looking at diaspora remittances]

Credit reports

Applicants will also be required to have a fixed and identifiable place of business that is accessible to the public and suitable in all respects for the business of money remittance as will be determined by the Central Bank.

According to CBK, prospective MRPs will be required to submit credit reports from a credit reference bureau for the applicant, shareholders, directors, the chief executive officer and any other senior officers of the money remittance provider.

According to the latest reports from CBK, diaspora money remitted into the country with remittances in September 2012 amounting to million (KES 7.9 billion) 2.4% lower than million (KES 8.06 billion) recorded in August 2012. CBK attributed the decline to a reduction of inflows from the European region.

Remittance providers in the country currently include Western Union, Moneygram, NationHela, Pingit, M Pesa and Tuma Pesa among others.