Regulatory Alerts2008-04-29
Banking Circular No 3 of 2008 - Term Auction Deposit
The Central Bank of Kenya announced in Banking Circular No. 3 of 2008 their intention to introduce a new deposit product called Term Auction Deposit (TAD) on April 25, 2008. This product will have competitive auction bidding systems and flexible tenures ranging from 3 to 90 days. Late TAD bids will be priced at 100 basis points below the day's weighted average rate. The deposit amount threshold is initially set at KES 20m, which will be adjusted to KES 10m for late TAD deposits. Current OMO dealing times apply and TAD deposits will be held until maturity, qualifying as part of the liquidity ratio. Late TAD bids won't be eligible as collateral for CBK borrowing or ILF creation. The Central Bank will acknowledge deposits through issuance of account statements on the Reuters OMO page. Testing will run for two days from April 28-29, 2008, and the product will be fully launched on April 30, 2008.