2011-08-26

Banking Circular No 7 of 2011 - The Central Bank Rate and Cash Reserve Ratio

The Central Bank of Kenya (CBK) has issued Banking Circular No. 9 of 2011, revising previous guidelines on liquidity management through the CBK discount window and cash reserve ratio. Firstly, the weight given to the differential between the interbank rate and CBR will now vary between zero and one depending on market conditions. Secondly, the interbank rate used in computations is now a moving average over a longer period. Finally, commercial banks are now required to maintain their cash reserves based on a monthly average basis, with an overall average of at least 4.75% for the month, or face penalization by CBK at the current penalty rate. These changes take effect from Monday, 29th August 2011.

Kenya

Central Bank of Kenya

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