The Central Bank of Kenya. [Photo/Businessdaily]
Kenyan banks have been forced to borrow Sh 20 billion from the Central Bank of Kenya.
This is after payments for the oversubscribed seven-year infrastructure bond tightened liquidity in the money markets last week.
According to CBK, the excess cash reserves held by banks fell Sh1.7 billion below the 5.25 per cent statutory minimum, having stood Sh10.4 billion above the threshold a week earlier.
“Tight liquidity conditions prevailed in the money market during the week on account of payments for an infrastructure bond that was oversubscribed.
The issuance of government securities resulted in a liquidity withdrawal of Sh57.3 billion, of which infrastructure bond accounted for Sh42 billion.
In addition, tax remittances resulted in a liquidity withdrawal of Sh16.3 billion,” said the CBK.
“The resulting leakage from interbank liquidity was partly offset by government payments of Sh10.5 billion and Central Bank support of Sh20.1 billion through Reverse Repo purchases.”