Retailers are exposing themselves to legal suits and regulatory punishments on opting to reject the older Sh1,000 notes ahead of the central bank withdrawal deadline of October 1.
A number of retailers including supermarkets and eateries are issuing notices to customers that they will not accept the old notes between September 26 and 29 —a day ahead of the Central Bank of Kenya (CBK) deadline for withdrawal.
The government in June issued an order for withdrawal of the older version of Sh1,000 notes by October 1 following the introduction of new notes to tackle illicit financial flows and counterfeiting.
Retailers have been forced to reject the older notes earlier than October 1 following confusion on how to deal with sales on the last day of trading with the old Sh1,000 note and fearing caught up with large volumes of cash that will become worthless overnight.
Lawyers reckon that older Sh1,000 note remains legal tender until October 1, and retailers rejecting could be sued and punished by the CBK.advertisement
“The old notes remain legal until September 30. Why should they refuse?” posed senior counsel Ahmednasir Abdullahi, adding that customers can sue the firms barring customers to transact in the older notes before the deadline.
He added that the retailers could face action from the CBK.
The Sh1,000 notes accounted for 83 percent of the Sh540 billion in circulation or Sh217 billion as per the CBK June data.
This illustrates that the Sh1,000 notes remain the king currency in Kenya, a position that has seen it favoured by those making fake currency as well as dealers hiding illicit cash outside the banking system.
“Dear customer, as per the government directive, we will not be accepting the old Sh1000 note as from September 26, 2019. Kindly use lower denominations or other means of payment,” fast-food chain Pizza Inn said in an SMS notice to its clients. Top retailers had a similar notice.
“We are taking precaution not to find ourselves with notes that we can’t bank. We are, therefore, going to cease taking the notes from 29th Sunday night,” Naivas Chief Commercial Officer Will Kimani said.
The older versions of smaller denominations will remain in circulation alongside the new ones launched June 1, but after October 1, the older Sh1,000 note would be invalid.
The 500 notes accounted for 5.9 percent of currency in circulation, Sh200 (4.2 percent), Sh100 (4.8 per cent) and Sh50 (1.9 per cent).
Banks also urged customers to rush and beat the deadline to replace the older notes.
Kenyan Business Feed is the top Kenyan Business Blog. We share news from Kenya and across the region. To contact us with any alert, please email us to [email protected]
