Regulatory Alerts2014-01-01
Capital Adequacy Requirements for Deposit Taking Microfinance Institutions Directive 2014
Issued by the Registrar of Financial Institutions under the Financial Services Act, 2010, this Directive mandates a minimum paid-up capital of K250 million and establishes core (10%) and total (15%) capital adequacy ratios for deposit-taking microfinance institutions. It requires institutions to apply risk-based weighting to on- and off-balance sheet assets, submit monthly compliance reports in a prescribed format, and maintain higher ratios when warranted by specific risk exposures or rapid growth. Should capital ratios fall below statutory thresholds, institutions must immediately notify the Registrar, restrict dividends and new investments, and implement a board-approved recapitalization plan within stipulated timeframes.
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