The Kenya School of Monetary Studies was registered on April 15, 1997 as a corporate body limited by guarantee under the Companies Act, Chapter 486 of the Laws of Kenya with Central Bank of Kenya as its principal shareholder (99%) and Treasury as the minority shareholder (1%). The School is also registered as a business under the Business Names Act, Chapter 489 as well as with Ministry of Education as a tertiary education institution offering Diploma and Certificate courses.
Response to spate of bank failures in the country in the 1980’s
A study done by a team of World Bank and IMF consultants to identify/establish reasons for series of Bank failures in the 1980’s revealed that there was urgent need for capacity building in the Kenyan financial sector to improve professionalism thereby ensuring sound banking practices and stability.
The immediate response to the study was the establishment in 1989 of the College of Banking and Finance (CBF). Central Bank of Kenya was charged with the responsibility for its establishment, immediately providing required resources and involving stakeholders – commercial banks and non-bank financial institutions in the college’s management and funding.
Its operations were however hampered by lack of commitment from commercial banks and NBFIs. Big banks felt they did not need the college as they had their training colleges and were able to train their staff overseas. The small banks however, required training offered by CBF in capacity building but maintained they did not have adequate resources to sustain the institution. In the final analysis, Central Bank of Kenya was the sole financier of the CBF and provided the management.
Members of the college approved its voluntary winding-up and transformation to Kenya School of Monetary Studies at an Annual General Meeting held in 1994 and the assets and programs of the College were handed over to the School by Central Bank of Kenya. This was done in accordance with Memorandum of Association of College of Banking and Finance which states inter alia that upon its winding-up the residual assets were to be taken over by Central Bank of Kenya.