The Cabinet has approved the much-awaited Micro Finance Bill that will offer a legal framework to players in the sub-sector.
According to minister Achilo Ayacko the Cabinet met last month and approved the Bill that will be discussed in Parliament when it reconvenes next month.
"We are concerned over withdrawal by commercial banks from rural areas."
"While we understand that profitability from rural-based branches had declined, their action left a vacuum that micro finance institutions can now fill," Ayacko told micro finance officials in Nairobi.
Currently, micro finance institutions, which include rural and urban Savings and Credits Co-operatives (Saccos) marshal deposits from members worth billions of shillings.
However, concerns have been raised over the legality of the institutions to collect deposits. Under the current arrangement, the Central Bank of Kenya does not supervise the institutions.
