A Central Bank of Kenya (CBK) report has exposed how naughty banks engaged in insider lending or breached the capital adequacy ratios.
In its 2019 Banking Annual Supervision Report, CBK said nine banks did not have adequate capital buffers since most of them were running on empty while another four banks were listed for over-indulging in insider lending.
Such close supervision meant to assure the public that nothing fundamental in the banking sector goes wrong is welcome.
The recent banking crisis that saw the collapse of Dubai Bank and Imperial Bank is still fresh in the minds of depositors and signs of new trouble can be quite disturbing.
Of course, that crisis happened despite regulatory and supervisory changes in the banking sector, which were designed to forestall another bank failure.
As such, it is of great concern that we still have a few banks that deliberately indulge in malpractices.
Where a few rogue banks continue to violate tight controls, it is hard for depositors who put faith in our banking system, to view the latest development highlighted by CBK as less serious than it actually is.
Monetary authorities need to go beyond technical solutions and put greater effort into reassuring ordinary savers and investors.
This is not because the majority of our institutions are not playing by the book. Rather, it is because a few bad elements risk eroding the re-emerging confidence in our banking system.