ADVOKS GLOBAL · KENYA
Banking Act
16. Restrictions on deposit-taking
Edition: 2024-12-27 · In force
16. Restrictions on deposit-taking
(1)Subject to this section, no person, other than an institution which holds a valid licence or a duly approved agency conducting banking business on behalf of an institution, shall invite or accept deposits in the course of carrying on a deposit-taking business.(2)For the purposes of this section, "deposit" means a sum of money paid on terms—(a)under which it will be repaid, with or without interest or a premium, and either on demand or at a time or in circumstances agreed by or on behalf of the person making the payment and the person receiving it; and(b)which are not referable to the provision of property or services or the giving of security.(3)For the purposes of subsection (2)(b), money is paid on terms which are referable to the provision of property or services or to the giving of security if, and only if—(a)it is paid by way of advance or part payment under a contract for the sale, hire or other provision of property or services, and is repayable only in the event that the property or services is not or are not in fact sold, hired or otherwise provided;(b)it is paid by way of security for the performance of a contract or by way of security in respect of loss which may result from the non-performance of a contract; or(c)without prejudice to paragraph (b), it is paid by way of security for the delivery up or return of any property whether in a particular state of repair or otherwise.(4)For the purposes of this section, "deposit" does not include—(a)a sum paid by the Central Bank or by an institution or the persons mentioned in section 54; or(b)a sum which is paid by a person to an associate of that person.(5)For the purposes of this section, a business is a deposit-taking business if—(a)in the course of the business money received by way of deposit is lent to others; or(b)any other activity of the business is financed, wholly or to any material extent, out of the capital of or the interest on money received by way of deposit.(6)Notwithstanding that paragraph (a) or (b) of subsection (5) applies to a business, it is not a deposit-taking business for the purposes of this section if—(a)the person carrying it on does not hold himself out as accepting deposits on a day-to-day basis; and(b)any deposits which are accepted are accepted only on particular occasions, whether or not involving the issue of debentures or other securities.(7)For the purposes of subsection (5), all the activities which a person carries on by way of business shall be regarded as a single business carried on by him.(8)In determining, for the purposes of subsection (6)(b), whether deposits are accepted only on particular occasions regard shall be had to the frequency of those occasions and to any characteristics distinguishing them from each other.(9)Any person who contravenes subsection (1) shall be guilty of an offence and liable to imprisonment for a term not exceeding three years or to a fine not exceeding one hundred thousand shillings or to both.