NAIROBI, Kenya – Commercial banks in Kenya must increase their minimum core capital to Sh10 billion by 2029 or risk heavy penalties, marking a significant regulatory shake-up for the financial sector.
The move follows the enactment of the Business Laws (Amendment) Act, signed into law by President William Ruto, which introduces sweeping changes across multiple economic and financial statutes.
The new capital threshold—up from the current Sh1 billion set in 2012—signals a renewed effort to strengthen the country’s banking industry.
President Ruto emphasized the law’s intent to spur mergers, create robust financial institutions, and expand Kenya’s regional influence.
“These amendments shall promote financial stability and protect depositors from systemic risks by ensuring banks adhere to adequate core capital requirements,” Ruto said during the signing ceremony.
Kenya now aligns itself with regional peers that have progressively raised their capital requirements.
In comparison, South Africa mandates Sh11.5 billion, Egypt Sh13.4 billion, and Nigeria a massive Sh43 billion.
Neighboring Uganda recently raised its threshold to Sh5.1 billion, leading to downgrades for several smaller banks, including Kenya’s ABC Capital Bank.
The directive is expected to place smaller banks under immense pressure.
Institutions like National Bank of Kenya, Consolidated Bank, and Premier Bank (formerly First Community Bank) already struggle to meet the current Sh1 billion requirement and may now face consolidation or restructuring to survive.
To cushion banks from sudden disruptions, Parliament’s Finance and National Planning Committee agreed to a phased implementation.
Banks will need to increase core capital by Sh1 billion annually over the next eight years, a compromise proposed by the Kenya Bankers Association (KBA).
While the KBA supports the policy’s long-term vision for stability, the lobby group warns that smaller lenders may struggle to balance capital demands with operational priorities, potentially limiting credit access and stalling growth.
Beyond the banking sector, the Business Laws (Amendment) Act introduces several financial and consumer protection reforms:
Digital Lenders: The Central Bank of Kenya (CBK) will now regulate “non-deposit-taking credit providers,” bringing digital lenders, peer-to-peer platforms, and “buy now, pay later” services under tighter scrutiny to enhance transparency and accountability.
Microfinance Institutions: Non-deposit-taking microfinance institutions must follow stringent reporting and governance guidelines, including clear disclosure of credit terms and ethical debt collection practices.
The new law also empowers the Kenya Bureau of Standards (KEBS) to establish testing and calibration laboratories while authorizing pre-export inspections to enforce compliance with Kenyan standards.
In trade facilitation, the law amends the National Electronic Single Window System Act to allow nominal fees for services offered by the Kenya Trade Network Agency.
It also streamlines Special Economic Zones, enabling enterprises to fast-track applications through a centralized one-stop shop.
This is Kenya’s second attempt in a decade to increase minimum capital requirements. A 2015 proposal to raise the threshold to Sh5 billion stalled in Parliament.
Experts argue that Kenya’s previous Sh1 billion threshold has lagged behind regional standards, posing systemic risks as the banking sector’s total assets ballooned to Sh6.5 trillion last year, with core capital standing at Sh809 billion.
The move follows the enactment of the Business Laws (Amendment) Act, signed into law by President William Ruto, which introduces sweeping changes across multiple economic and financial statutes.
The new capital threshold—up from the current Sh1 billion set in 2012—signals a renewed effort to strengthen the country’s banking industry.
President Ruto emphasized the law’s intent to spur mergers, create robust financial institutions, and expand Kenya’s regional influence.
“These amendments shall promote financial stability and protect depositors from systemic risks by ensuring banks adhere to adequate core capital requirements,” Ruto said during the signing ceremony.
Kenya now aligns itself with regional peers that have progressively raised their capital requirements.
In comparison, South Africa mandates Sh11.5 billion, Egypt Sh13.4 billion, and Nigeria a massive Sh43 billion.
Neighboring Uganda recently raised its threshold to Sh5.1 billion, leading to downgrades for several smaller banks, including Kenya’s ABC Capital Bank.
The directive is expected to place smaller banks under immense pressure.
Institutions like National Bank of Kenya, Consolidated Bank, and Premier Bank (formerly First Community Bank) already struggle to meet the current Sh1 billion requirement and may now face consolidation or restructuring to survive.
To cushion banks from sudden disruptions, Parliament’s Finance and National Planning Committee agreed to a phased implementation.
Banks will need to increase core capital by Sh1 billion annually over the next eight years, a compromise proposed by the Kenya Bankers Association (KBA).
While the KBA supports the policy’s long-term vision for stability, the lobby group warns that smaller lenders may struggle to balance capital demands with operational priorities, potentially limiting credit access and stalling growth.
Beyond the banking sector, the Business Laws (Amendment) Act introduces several financial and consumer protection reforms:
Digital Lenders: The Central Bank of Kenya (CBK) will now regulate “non-deposit-taking credit providers,” bringing digital lenders, peer-to-peer platforms, and “buy now, pay later” services under tighter scrutiny to enhance transparency and accountability.
Microfinance Institutions: Non-deposit-taking microfinance institutions must follow stringent reporting and governance guidelines, including clear disclosure of credit terms and ethical debt collection practices.
The new law also empowers the Kenya Bureau of Standards (KEBS) to establish testing and calibration laboratories while authorizing pre-export inspections to enforce compliance with Kenyan standards.
In trade facilitation, the law amends the National Electronic Single Window System Act to allow nominal fees for services offered by the Kenya Trade Network Agency.
It also streamlines Special Economic Zones, enabling enterprises to fast-track applications through a centralized one-stop shop.
This is Kenya’s second attempt in a decade to increase minimum capital requirements. A 2015 proposal to raise the threshold to Sh5 billion stalled in Parliament.
Experts argue that Kenya’s previous Sh1 billion threshold has lagged behind regional standards, posing systemic risks as the banking sector’s total assets ballooned to Sh6.5 trillion last year, with core capital standing at Sh809 billion.
