The licensing of First Community Bank, which intends to roll out a complete array of Islamic banking products and services has stirred the financial sector with questions lingering over its viability.
First Community Bank represents some kind of rethink among policymakers who previously blocked a licence for the proposed Coffee Bank, which intended to specialise offering financial services to the agricultural sector, with its core sector being coffee.
The licence was denied on the basis that sectoral oriented banks would find it difficult to survive, particularly were external shocks like commodity price declines, sharp foreign exchange swings or a crop debilitating disease to befall the sector.
Similar issues linger with regard to First Community Bank with the Central Bank admitting that the bank’s viability may not be guaranteed. Its key target is the 800,000 strong Somali community in Kenya renown as traders and transporters with an estimated savings base of Sh800 million.
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