The Central Bank of Kenya in Nairobi. [ photo / Business Today ]
The cash reserves held by the Commercial Banks in Kenya rose above the statutory requirements to hit an 11-week high last week as the lenders rushed to clear taxes ahead of November 20 deadline.
According to the fresh data released by the Central Bank of Kenya in their weekly bulletin, the banks exceeded the Cash Reserve Ratio (CRR) by Sh 10.4 billion, which is an improvement from Sh 4.4 billion recorded in the previous week.
This was the highest level recorded since the week that ended on September 13 when CBK recorded Sh 10.7 billion.
Cash Reserve Ratio (CRR) technically refers to a certain amount of daily deposits ( mainly at an average of 5.25 percent ) that the banks are required to maintain in their accounts at the Central Bank of Kenya for a month that ends on 14th.
“This may be attributable to the fact that banks were accumulating liquidity to meet tax payment obligations that were due on November 20,” noted CBK in its weekly bulletin.
On the week to October 18, the banks traded below average hence breaching the CRR guideline as their reserves dropped Sh 1.5 billion below the minimum requirements following the limited cash circulation.
It was not until on the week to November 22 that lenders were compelled to pay Sh 32.8 billion in taxes thus enabling the net balance between cash that was injected into the market and withdrawals.