CBK Lifts Ban On Licensing Of New Banks After Nearly A Decade

The Central Bank of Kenya (CBK) has officially lifted a nine-year suspension on the licensing of new banks, signaling a major shift in the country’s banking sector.

In a statement issued on Wednesday, CBK announced that the moratorium, which was imposed on November 17, 2015, will end on July 1, 2025.

The suspension was introduced at a time when the banking industry faced serious governance, management, and operational problems.

According to CBK, the moratorium helped create room for reform and stability in the banking sector. Over the years, the country has strengthened the legal and regulatory frameworks that govern banks.

“Since then, significant progress has been made in improving the legal and regulatory structure. We have also seen a rise in mergers and acquisitions, as well as the entry of new local and foreign investors into the market,” said CBK in the statement.

One of the latest measures to reinforce the sector is the new requirement for commercial banks to have a minimum core capital of KSh10 billion, as introduced by the Business Laws (Amendment) Act, 2024.

CBK says the reopening of the licensing window will allow for more players to enter the market — provided they meet the tough new requirements. This move is expected to expand access to banking services across the country.

“Stronger and more resilient banks will be better positioned to manage risks and support large-scale financing to meet Kenya’s development goals,” CBK said.

At the same time, CBK’s Monetary Policy Committee on April 8 reduced the base lending rate from 10.75% to 10.00%, in a move aimed at easing the cost of borrowing and boosting economic activity.