History of Front office services Activity

Front Office Services Activity

Traditionally Savings and Credit Societies facilitated provision of affordable loan facilities to its members. Majority of these Savings and Credit Societies usually loan their members three times the shares they hold with the society. These types of loans are categorized as school fees loan, emergency loans or quick loan and development loans. The loan repayment period is usually between twelve and thirty six months.

The idea of Front Office Services Activity was birthed in these Savings and Credit Societies. AT that time, banking services were out of reach for the middle and low class income earners due to the high account maintenance commission and minimum account balance.

The main purpose of this Front Office Services Activity was to enable members open accounts and operate them. Even though this was a good idea there are some un-scrupulous members of Central Management Committee membership who were determined to swindle their members of their hard earned income through this Front Office Services Activity.

 Challenges of managing front office services activity

Front office services activity is a savings and deposit taking enterprise. this attracts unscrupulous people. They are supervised by the Ministry of Co-operative Development. The Ministry does not have or seem to have capacity to adequately supervise the FOSAs.

Due to loopholes created by inadequate supervision, corrupt Committee members embezzle funds from the front office services activity account-holders’ savings accounts.

Central Management Committee members are elected into office. Majority of them do not have qualifications to manage this Front Office Services Activity.

 Measure that can used to protect front office services Activity members

In order to protect members deposit and save the Front Office Services Activity, the following should be put in place:

• A regulatory body should be establishing to monitor the activities of each Front Office Services Activity. This body should also vet the Savings and Credit Societies who intend to start offering these services.
• Qualified personnel should be engaged to effectively run these services. These staffs will be tasked with making sensible business decisions, formulating policies and controls, and taking responsibility of  financial performance of the front office services activity.
• The deposit protection fund should be expanded to include the front office services activity, to protect the members from losing their hard earned monies.
• The services of independent auditors should be obtained as opposed to the Ministry of Co-operative Development auditors. Final accounts should be availed to all members and the public at large.
• A Board of Management should be constituted to ensure that the  Front Office Services activity are professionally managed.

The critical role played by front office services activity in the economic development should be recognized and encouraged. Countries should adopt this kind of banking channel to ensure financial inclusion for its poor and marginalized citizens. Front office services activity could be considered as a type of Agency banking.

What are demand deposits in Kenya

Demand Deposits in kenya

Demand deposits in Kenya are also known as call deposits. The investor does not have to give notice to withdraw their funds from the financial institution. The financial institution does not give high interest rates for demand deposits in Kenya.

Most demand deposit in Kenya accounts are charged monthly fees for maintenance. The interest rates in these demand deposits are usually lower than the bank charges especially, for small value investments. It is therefore in the interest of the investor to determine when they would require demanding or calling their deposits and if it is more than seven days, considering time deposits as an investment option.

The types of demand deposits that will be mentioned are savings accounts, money markets and current accounts. They are explained below

Savings accounts type of demand deposits in Kenya

Savings accounts are demand deposit accounts that are used by investors to accumulate funds to perform certain tasks. These accounts may also be used to build retirement benefits. The returns or interest paid on these time deposits are average. The savings accounts are considered a safe way of investing for the future.

Money market type of demand deposits in Kenya

Money market accounts are demand deposits where an investor trades in money and not stocks. The investor’s interest rate is not assured and it changes daily. These are seen as risky investments and the investor could loss even part of the principle amount invested. The bank charges minimal amounts for bank charges on these demand deposits.

Current account type of demand deposits in Kenya

Current accounts are also referred to as checking accounts and are demand deposits. The investor usually does not earn any interest for this kind of investment. The bank charges and fees vary depending on the type of checking account, for example, a private banking investor may have higher charges compared to an ordinary investor.

The advantage of demand deposits is that money can be withdrawn immediately. With the advent of mobile banking and ATM card services, the investor has access to their funds any time of day or night. Demand deposits are offered by all banks in Kenya. The rate of interest or return varies from bank to bank.

An investor has to decide the target and reason for the investment choice. It is advisable for an investor to talk to the bank officers and find out about the demand deposits in Kenya that will suit all their

What are time deposits in Kenya

Time deposits in Kenya are investments that are placed the funds are not easily available to the investor before the time of the deposit has elapsed or expired. The time deposits in Kenya may be for as short as 7 days or as long as the options are availed. Time deposits are also referred to as fixed deposits or term deposits.

Time deposits in Kenya

The investor gets a fixed interest at the end of the investment period. This amount is higher the longer the funds are invested. For example, the investor will earn a higher interest for depositing the funds for 1 year than they get for 1 month. The very long term time deposits may not give very attractive interest rates compared to the middle term time deposits.

When the time agreed on the time deposit in Kenya lapses, the investor can either roll over the investment, that is, invest the funds again or the amounts may be returned to the investor.

The investor of time deposits in Kenya is charged a penalty fee if they withdraw their funds from the time deposit before it matures. In most cases the investor losses the interest they had negotiated and even have to refund the bank as part of the penalty. When investing in time deposits, the depositor must consider what the time span he or she has idle funds for, that can be put aside to earn higher interest.

There are three types of time deposits traditional certificates of deposits, liquid certificates of deposits and broker bought certificates of deposits. These are explained below:

Time deposits in Kenya – Liquid certificates of demand

Liquid certificates of demand are time deposits that the investor negotiates with the bank on amounts that can be withdrawn before the maturity of the time deposit. The amounts that one can withdraw are decided by the bank and are usually a percentage of the deposited funds. Sometimes the bank also restricts the number of times the investor can withdraw. The bank may allow one withdrawal per quarter. If the investor requires taking more than the bank allows, the investor is then subjected to a penalty fee.

Time deposits in Kenya – traditional certificates of deposits

Traditional certificates of deposit are time deposits where the investor is charged a penalty if they withdraw before the maturity of the deposit. The funds could be invested for even five years.

Time deposits in Kenya – broker bought certificates of demand

Broker bought certificates of deposits are time deposits that are sold to investors by brokers. The brokers buy the certificates and they sell them to investors for a profit or commission. The time deposits can be for a period from seven days to one year.

It is important to make your money work for you. You must look for save investment options that can bring a return higher than what the bank savings accounts may offer.  Time deposits in Kenya can be used by people who are interested in investing and making good returns on investment.

prepaid cards for kids in Kenya

Prepaid cards for kids in kenya

The cards are purchased by the parents for the children who are eighteen years and less. These children do not have contractual rights. The children get the cards and they do not have to keep asking their parents for pocket money. The parent’s credit money into these cards and when the money is used up, the cards cannot be used until they are reloaded.

The children are able to learn how to control finances. The parents could reload the cards on a monthly basis which may be seen as a salary for the children. The children then have to budget and prioritize their spending since they know that the cards will not be reloaded until the month is over.

The children may also learn how to save and maintain children bank accounts from the money they save on their cards on a monthly basis. The money can either be left in the card account as savings or that may be transferred to savings accounts.

Advantages of prepaid cards for Kids in kenya

• One of the major advantages of prepaid cards for kids is that the kids become somewhat independent and they make their own financial decisions. The children feel that they are being treated with respect and like grown-ups. The children especially teenagers value the feeling of freedom.
• The parents are able to keep tract of the spending of their children. The prepaid cards for kids have statements which are either paper based or accessed on the internet. Parents are able to council their children especially if they are deviant on the use of their cards.
• The kids do not have to ask for pocket money on a daily basis or even weekly, because the cards are loaded with funds for a month or more.

The disadvantages of prepaid cards for kids in kenya

• The children may refuse or reduce the use of their prepaid cards because they feel that the parents are spying on them and their friends
• The children may get used to use of cards and become hooked and later on in life they may have challenges with their finances. The children have to be trained on the proper use of cards and the cash in the cards.
• Kids may become targeted by bullies and fraudsters because they have the prepaid cards for kids who have funds loaded on the cards. Theft and robbery in schools may increase especially where the cards do not have the kids’ names on the cards.
• There are charges that are loaded to the prepaid cards for kids. These charges are debited to the cards, reducing the amounts available to the kids. The kids may prefer to get cash instead.

All in all, prepaid cards for kids in Kenya is the way to go. The advantages outweigh the disadvantages. The kids can be trained on how to handle the prepaid cards for kids in kenya that they carry to minimize fraud and losses.

Sources of funds for Womens banking in Kenya

• Salaries and wages: Women who are employed get a salary from which they are able to put aside a percentage as savings.
• There are also women who engage in business enterprises. The women put aside some part of their profits as savings
• Sales and bargaining: Before women shop they look for the best prises. Most men do not understand this idea of shopping but a woman can spend the day shopping. The women are looking for the best price so that they can save some money from their shopping budget. This money is either taken to the bank or for women in rural areas; they keep the money in a safe place like an old jar in one of the kitchen shelves
• Women also join with others either from their churches or village and start savings clubs. Depending on the clubs reason for being and investment needs, the women contribute a minimal amount. The clubs usually operate a ‘merry go round’ club. The contributed amount is given to one or two women in the group. The members of the club may opt to save the collections received per month in a bank and buy a piece of land or building.
• Women get gifts from their children or family members in form of cash. They bank these monies in their bank accounts.

Womens banking  in kenya likely hiding places for cash

• In a jar in the kitchen
• In the granary or store
• In the bank
• In sacks of maize or beans or dried grains

The banking industry in Kenya has finally acknowledged the efforts made by women and have devoted products solely for women. The products are in all categories. The banks are trying to tap the monies that women safe in jars and under their mattresses. These monies when added together make significant deposits and would be used by banks to increase their lending. Womens banking in Kenya has come of age.

How to Get the Best Bank Accounts in Kenya

A bank account in Kenya is a recording of all the financial transactions that happen between the customer and the banking institution. Banking in kenya has provided several types of bank accounts to cater to all.

One of the most important functions of banks is taking in deposits. This is according to the central bank of Kenya. People, on the other hand, also prefer to deposit their savings in the banks’, as they can earn interest and also avoid the danger of theft.

Types of bank accounts in kenya

Types of accounts on offer by banks vary but most banks work from the same script in their product offering

typesofbankaccountsinkenya

Cheque Bank accounts in kenya

A cheque account can also be referred to as a current account which is run in a transaction account. When money is deposited in this kind of account, the owner can withdraw it at any time. The choice of withdrawal amount and the number of times a customer wants to withdraw is left to the customer. Customers use cheques leafs to withdraw cash or make payments to others or making purchases. ATM cards can also be used. Very few banks pay interest on these types of accounts but customer pay banks what is commonly known as bank charges. These charges are levied by the bank to the customers for use of the banking facilities. A customer can demand his funds without notice to the financial institution.

Savings bank accounts in Kenya

These accounts are used by banks to collect money from customers, which the banks then lend to those who need loans. The customers earn interest on their savings accounts. The banks usually restrict the amount and number of times a savings account customer can withdraw. Few banks give cheque books for savings accounts, though majority of the banks give ATM cards to their customers

Money market bank accounts in kenya

A minimum amount is required to open this account. The minimum amount is the amount that must be in the account at any one time. Charges are levied on accounts that are below minimum, and these accounts are eventually closed if they are not funded. These types of accounts earn interest for the customers. The number and amounts withdrawn per month are restricted depending on the bank or financial institution.

Fixed deposit bank accounts in Kenya

This account has various names, for example time deposit or certificate of deposit. The amounts deposited in the account are fixed for a specified time. Different amounts and with corresponding different time periods earn different interest rates. The longer the amounts are held, and the more the amounts held then the customer earns higher returns or interest. After the customer has fixed a deposit, he can pay a penalty to the bank to have access to his funds.

Banks compete by the products they offer to the public. in kenya the tpyes of bank accounts on offer are many and the customer is spoilt for choice.