CBK lifts 10-year moratorium on licensing of new commercial banks
They will, however, be required to have a minimum core capital of Ksh 10 billion in line with the Business Laws (Amendment) Act, 2024
The Central Bank of Kenya (CBK) has announced plans to lift a decade-old moratorium on licensing of new commercial banks.
In a statement, CBK said the move will take effect from July 1, 2025, it will lift the moratorium on licensing of new commercial banks.
The moratorium has been in place from November 17, 2015 and was imposed against a backdrop of governance, risk management, and operational challenges in the banking sector.
Though CBK did not give reasons for imposing the moratorium, it now says the moved was intended to provide space for the strengthening of the Kenyan banking sector.
However, it followed CBK’s placement of Imperial Bank under the management and control of the state’s Kenya Deposit Insurance Corporation because of what the Central Bank termed as “unsafe and unsound business conditions” at the Bank. It emerged that the crisis was as a result of internal fraud.
Since then, only two banks, Mayfair Bank and CIB Kenya, formerly Mayfair CIB Bank Kenya Limited to CIB Kenya, have been registered.
However, CBK says that since the imposition of the moratorium, significant strides have been made in strengthening the legal and regulatory framework for Kenya’s banking sector.
“Notably, there have been a number of mergers and acquisitions by existing players and entry of new domestic and foreign strategic investors into the sector,” it said.
But it added that those seeking to open new commercial banks will be required to have a minimum core capital of Ksh 10 billion in line with the Business Laws (Amendment) Act, 2024.
“The recent increase, in the Business Laws (Amendment) Act, 2024, of the minimum core capital requirements for commercial banks to Ksh.10 billion will further reinforce the strengthening of the banking sector. Following the lifting of the moratorium, new entrants to the Kenyan banking sector will be required to demonstrate that they can meet the enhanced minimum capital requirements of Ksh10 billion.”
According to CBK, stronger and more resilient banks will be able to navigate the growing risks in the global, regional, and domestic arenas. Additionally, they will be able to support large scale financing needs to meet Kenya’s development aspirations.
