If you have between one million and five million shillings in cash of the current banknotes, and you do not have a bank account, the Central Bank of Kenya is willing facilitate the exchange to designated bank branches.
CBK Governor Dr Patrick Njoroge says the bank will continue to give more public information of the new notes so as to avoid economic disruptions such as the one experienced in India during demonetization.
” Lessons from India, first they demonetised immediately. Imagine if you’re a truck driver, and when it was announced, you could not buy food nor fuel. You couldn’t rush to the bank to change money. This is why we’ve allowed a period for transactions to continue. We’ve allowed the time for the withdrawal of the banknotes because we need to take care of our people. We need to ensure Wanjiku has all the relevant information and has enough time for the changeover. Secondly, there wasn’t enough cash in the bank branches at the time the announcement was made (in India). We’re ensuring that there is enough cash in all the bank branches.” He said
“Thirdly, there wasn’t enough cash in the bank branches at the time the announcement was made (in India). We’re ensuring that there is enough cash in all the bank branches. India could have done better in communications, and we intend to communicate as widely and clearly as we can.” He added.
According to CBK, banknotes currently in circulation include; 217.6 million pieces of KES 1,000 – 30.8 million pieces of KES 500 – 54.8 million pieces of KES 200 – 126.4 million pieces of KES 100 – 100.5 million pieces of KES 50 – 9.9 million pieces of KES 20.
Njoroge says holders of between Kshs 1 million and Kshs 5 million of the 1000 notes being mopped out of the market should exchange the notes with their respective banks and only those with excess of Kshs 5 million and without bank accounts should seek audience with the regulator.
However, the transaction will only be deemed success with proper documentation on the source of the cash.
” People who want to exchange amounts between KES 1m and KES 5m will need to go to their own banks. Those who do not have bank accounts and want to exchange this amount will need to contact the CBK. We will then endorse them and they can go to a designated bank branch. People who want to exchange amounts above KES 5 million will need to contact the CBK. We have, however, analysed these and found that these are very few.” Njoroge added.
Njoroge further says to avoid disruptions such witnessed during India’s demonetization in 2016 where 1,000 and 500 rupee notes were withdrawn from circulation; CBK is in talks with commercial banks, forex bureaus, payment service providers and regional central banks.
” We will continue to release the New Generation Currency banknotes to all commercial banks and microfinance banks. This process will work seamlessly. I have just spoken to CEOs of commercial banks, and I will also later today speak to forex bureaus and payment service providers. I shall also speak to the Governors of our sister central banks in the region.” He said.
The new currency is deemed, a trojan horse to stem corruption, illicit financial flows as well as curb prevalence of counterfeit money that is currently in high circulation.
” Illicit financial flows involving the Kenya Shilling are not just in Kenya. They also affect our neighbouring countries. We looked at the matter of demonetisation in India and learned from it. Demonetisation is a tool of central banking, and has happened even in Kenya. We demonetised at the end of 2011, including the 5-shilling note.” He noted.
With legal litigations’ mounting, Njoroge says rights to withdraw currency rest with the regulator.
” We as citizens should be proud of the New Generation Currency banknote. There is nothing worse than having uncertainty with regards to currency matters. The Central Bank of Kenya has always had the right to withdraw currency, and has withdrawn some in the past.” He added.
Demonetization of the old currency would see invalidation of the current 1,000 shilling note at the end of September 2019.