Why new notes are taking time to hit your wallet
- “Not everyone is visiting a bank today to seek for the new currency notes," SilverHouse Capital CEO Bob Ndubi said.
- There is also need for training on how to handle the new series notes in addition to system upgrades within financial services providers.
- Insiders anticipate muted costs to the transition as the majority of lenders rent rather than own some of the key banking groundwork.
While a number of Kenyans have already gotten their hands on the new age currency notes, a similar proportion is yet to interact with the new notes to this point.
This may leave many in an anxious state driven on one hand by the urge to deal in new notes and on the flip-side, the need to rid off the old Ksh.1000 by the October 1 deadline.
In spite of the receipt of the first batch of new currency notes by the Central Bank of Kenya (CBK) on Thursday, the issuance of new currency involves a full-circle process that sees recent monies transverse through the financial sector’s gut before reaching consumers.
“Not everyone is visiting a bank today to seek for the new currency notes. The usual circulation of money is ever evolving and time-driven. On one hand, individuals have to initiate spending to getting their hands on the new currency by so doing,” SilverHouse Capital CEO Bob Ndubi told Citizen Digital in an earlier interview.
There is also need for training on how to handle the new series notes in addition to system upgrades within financial services providers, Mohamed Wehliye, an advisor to the Saudi Reserve Bank says.
“There is a need for the comprehensive training of staff on the proper identification of both new and old series notes. In addition, infrastructure such Automated Teller Machines (ATMs) have to be reconfigured to churn out new notes which differ in measure from the old series notes,” he told Citizen Digital.
While the re-configuration and adjustments reflect on additional operating costs for commercial banks, insiders anticipate muted costs to the transition as the majority of lenders rent rather than own some of the key banking groundwork.
The majority of Kenyan banks are for instance tenants to the system support, a service anchored primarily by the Georgia headquartered National Cash Register (NCR) Corporation.
Though a subject of much contention, the 4-month transition period gives enough time to individuals and businesses alike to changeover to the new currency regime.
This to averting a potential liquidity-crunch as was the case in India’s short-pegged demonetization window.
“There is enough time for individuals to access their respective branches. Old notes have to be sieved through the banking sector with the CBK availing new currency notes upon the return of the withdrawn ones,” said Kenya Bankers Association (KBA) Chief Executive Officer Habil Olaka.
The demonetization exercise of the approximated 217.6 million units of the old series Ksh.1000 notes is expected to purge ill-gotten proceeds from counterfeiting and illicit financial flows as the Central Bank embarks on a multi-sector scrutiny on the sources of funds.
While CBK has banked on the procedure to clean illicit financial flows in the economy, some of the players in the financial sector expect little to no effect pointing to the diversity of asset investments among the targeted individuals.
“There is no empirical evidence collating money supply and corruption. Japan which is regarded as the most cash heavy economy on the globe ranks low in the corruption perception index.
“The issue of asset allocation among the target group is diverse to include physical assets and foreign currency denominated fortunes even if they hold a share of local currency,” EcoBank Head of Research George Bodo said.
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