Senate Moves To Amend Law Regulating County Bank Accounts

The Senate Standing Committee on Devolution and Intergovernmental Relations has announced plans to amend the Public Finance Management (PFM) Act to set clear rules for how county governments open, manage, and close their bank accounts.

This move is aimed at enforcing compliance with existing regulations that require all county government accounts to be opened at the Central Bank of Kenya (CBK), except for petty cash accounts.

The committee said the changes will help improve accountability, transparency, and efficiency across all 47 devolved units.

Currently, Regulation 82 (1)(b) of the PFM (County Governments) Regulations, 2015, stipulates that county accounts must be held at the CBK.

However, many counties continue to operate multiple accounts in various commercial banks, which violates this rule and has raised concerns over the misuse of public funds.

During a meeting held earlier today with the Council of Governors (COG), the Controller of Budget, and the Office of the Auditor General, members of the committee, chaired by Senator Mohamed Abass, stressed the urgent need for counties to follow the law.

“Many counties have not been following the law. We need to review the legal provisions under the PFM Act and related regulations so that we ensure compliance in the opening and management of county government bank accounts,” said Senator Abass.

The senators proposed stronger enforcement measures, including introducing penalties and closing down inactive or misused accounts to improve financial oversight.

Defending the counties, the Chair of the COG’s Finance Committee and Kakamega Governor Fernandes Barasa explained that many counties open commercial bank accounts to meet conditions set by development partners who fund certain projects. However, he acknowledged the need to review the law to match current realities.

“Counties have many bank accounts as part of the requirement from our development partners. I agree with the Committee that we need to amend the law to give us more flexibility,” Governor Barasa said.

Controller of Budget Margaret Nyakang’o and Auditor General Nancy Gathungu called for stronger collaboration with the National Treasury to ensure all grants and donor funds are first deposited into the County Revenue Fund before being used in specific projects.

“Empower the Controller of Budget to impose sanctions, such as delaying fund disbursements, on counties that fail to follow the law,” urged Auditor General Gathungu.