Kenyan Banks Grapple with Frustration Over New CBK Regulations
Kenyan banks are facing mounting frustration as the Central Bank of Kenya (CBK) rolls out stringent policies and regulations, demanding compliance by December 2025. The new rules, aimed at bolstering financial stability, have sparked unease across the banking sector, with institutions scrambling to adapt amid tight deadlines and rising operational pressures.
A key source of contention is the CBK’s directive to increase minimum core capital requirements. Banks must raise their capital from Sh1 billion to Sh3 billion by the end of 2025, with a phased escalation to Sh10 billion by 2029. For smaller banks, this poses an existential threat—over half risk closure or forced mergers if they fail to secure funds. Even larger players, including foreign subsidiaries, are appealing to parent companies for capital injections, straining global relationships and profitability goals.
Adding to the frustration, the CBK has slashed the Central Bank Rate (CBR) to 10.75%, pressuring banks to lower lending rates. Yet, only five of 38 banks have complied, citing risk and margin concerns. Governor Kamau Thugge has threatened fines of up to Sh60 million for non-compliance, further souring relations. Banks argue that these measures, while intended to ease credit access, clash with their need to maintain financial buffers amid economic uncertainty.
The regulatory overhaul, including climate risk provisions and heightened oversight, demands costly system upgrades and staff retraining. Bankers lament the short timeline, with one executive anonymously calling it “a race against an impossible clock.” As 2025 looms, the tension between CBK’s stability goals and the banks’ operational realities threatens to reshape Kenya’s financial landscape—potentially at the expense of smaller institutions and customer trust.
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