Section 2 of the Banking Act Cap 488 Laws of Kenya defines a Bank to mean a company which carries on or proposes to carry on banking business in Kenya and it includes the co-operative bank of Kenya but excludes the Central Bank of Kenya.
Banking business is then defined under Section 2 of the same Act to mean
(a) The accepting from members of the public of money on deposit repayable on demand or at the expiry of a fixed period or after notice.
(b) The accepting from members of the public of money on current account and payment on and acceptance of cheques.
(c) The employing of money held on deposit or on current account or any part of it by lending, investment or in any other manner for the account and at the risk of the person so employing the money.
United Dominions Trust vs. Kirkwood  2 QB 431
A Company (Kirkwood) purchased cars for its business using the money it borrowed from UDT. The company failed to pay when required to do so. When UDT sued the company it argued that UDT was not entitled to recover because it was not registered as a lender uder the Money lenders Act of 1906 of England. That UDT was not a bank. UDT argued that it was a bank and it need not have been registered under the Act alleged.
In order to conduct banking activity, a company needs to be regulated by the Financial Services Authority (a self funding regulator) and comply with the financial Services and Marketing Act 2000. In order to lend funds, you need to be regulated and this had been stated in many Acts. UDT was not regulated and lending unauthorised is a criminal activity. You cannot enforce payment of a debt if you are not regulated. The question was asked in the court, was UDT a bank? The Court of Appeal said UDT was not a bank and so it could not enforce repayment.
The key issue here was: What is the test or approach to be used to define what is a bank? The whole idea of a bank was that you take deposits from customers and put it into accounts. The bank can then payout funds from these accounts by means of a cheque or otherwise. Note that the other factor in this case was that the market in general and other institutions regarded UDT as a bank.
The usual characteristics of banking are
1. The conduct of current accounts;
2. The payment of cheques;
3. The collection of cheques for customers.
Our own statute banking law definition is largely influenced by the common law definition of banking as was stated in United Dominions Trust vs. Kirkwood  2 QB 431T. This case. Statutory definition overrides the common law definition as provided for under the Judicature Act Cap 8. As far as Kenya is concerned we have statutory definition of bank under the Banking Act which is applicable in Kenya.
This definition however covers a bare minimum leaving other services provided for by the bank which are not covered under the definition. Individuals running the banks that lend money at the risk of the bank should be held together with the …
Financial Business under the statutes means the accepting from members of the public of money on deposit repayable on demand or at the expiry of a fixed period or after notice; and the employing of money held on deposit or any part of the money, by lending, investment or in any other manner for the account and at the risk of the person so employing the money. This is everything the statute says is banking business except the acceptance of money on current account and payment on and acceptance of cheques.
This means a company other than a financial institution which accepts, from members of the public money on deposit, repayable on demand or at the expiry of a fixed period or after notice and is established for purposes of employing such money, to make loans for the purpose of acquisition, construction, improvement, development, alteration, or adaptation for a particular purpose of land in Kenya and the repayment of that loan together with interests and other charges is secured by a mortgage or a charge over land with or without additional security or personal or other guarantees. The provisions of the Banking Act in this regard which is at Section 15 were amended by Act No. 7 of 2001 which provides that a mortgage finance company may grant other types of credit facilities against securities other than land and may also engage in other prudent activities.
The minister has to address his mind to adequacy of capital. Section 7 of the Banking Act provides for minimum requirements of capital which may be changed from time to time with approval of parliament.
If a bank wants to merge or transfer its assets to another institution, again the approval of the Minister is required under Section 9. The Minister has to satisfy himself and give approval for a merger or amalgamation.