The Luhya Elders Forum has accused governors from Western region of failing to support Mulembe Investment Micro-finance.
The governors had promised to set aside funds to support the establishment of a regional commercial bank.
Patrick Wangamati, the chairman of the forum, said although individual governors had bought shares, they had failed to factor in money from the counties that would boost the institution into becoming a fully operational bank.
"The bank is for the economic good of the region. Our target was to get Sh250 million from each of our five counties in the region, which would have placed our starting capital at Sh1 billion. This would have enabled us to have a bank, instead of the micro-finance," Mr Wangamati said.
The forum oversees the councils of elders drawn from various sub-tribes in the region.
The elders spoke during the requiem mass for pioneer Education minister Joseph Otiende, who was buried at his home in Kegoye on Saturday.
Wangamati noted that Mr Otiende had wanted economic empowerment for the Luhya community and was among the elders who initiated the idea for a regional bank and went ahead to buy shares.
Established a few years ago, the micro-finance aimed at promoting Luhya unity as well as promoting the welfare of locals.
It was supported by legislators through their Western Parliamentary Caucus who went ahead to propose an initial capital base of Sh1 billion to be used to drive the region's economic turn-around.
It planned to get some of its funding from the counties, which were permitted to invest a maximum of Sh250 million for such ventures and shareholders.
Peter Ludava, the forum's secretary, said the governors had not given the micro-finance the boost it required to enable it to realise the dream of becoming a fully-fledged bank.
"It would have been very possible to immediately have a fully recognised bank if the governors had pumped in Sh250 million each. Right now, we only have a micro-finance in which individual leaders have invested," Mr Ludava said.
He said the governors opted to join their Nyanza counterparts in opening another bank, which they have supported fully.
He however said the forum did not hold a grudge against the governors for failing to support their institution, adding that they were hopeful the micro-finance would follow in the footsteps of Equity Bank, which started small a few years ago.