Banks Get Three More Years to Meet Sh10 Billion Capital Requirement

Commercial banks struggling to meet the minimum core capital requirement have been granted a three-year extension, providing relief to more than 20 lenders that remain below the proposed threshold.

Treasury Cabinet Secretary John Mbadi announced that the deadline for banks to increase their minimum core capital from the current Sh3 billion to Sh10 billion has been pushed from December 2029 to December 2032.

The Treasury has also scrapped the phased capital increase framework that required banks to meet annual capital targets over the implementation period.

Speaking while presenting the 2026/27 Budget Statement in Parliament, Mbadi said the proposed changes are intended to give lenders more flexibility in raising additional capital without disrupting their operations or eroding shareholder value.

“I will be proposing amendments to the timeline specified in the Business Laws (Amendment) Act, 2024 to allow commercial banks to raise the minimum core capital to Sh10 billion by December 31, 2032 without the annual milestones,” Mbadi said.

“This will provide the flexibility necessary for institutions to pursue measured, commercially sound and market-sensitive capital-raising strategies in a manner that preserves shareholder value and sustains investor confidence,” he added.

The revised timeline comes as a significant number of banks continue to face challenges in meeting the higher capital threshold introduced under reforms aimed at strengthening the stability and resilience of Kenya’s banking sector.

The capital enhancement programme began last year, with lenders required to maintain a minimum core capital of Sh3 billion as part of the transition towards the Sh10 billion requirement.

According to industry data, 24 commercial banks were below the Sh10 billion threshold at the beginning of this year, while 12 lenders had core capital levels below Sh3 billion.